Exam 11: Service Department and Joint Cost Allocation

The characteristic that is most often used to distinguish a product as either a main product or a by-product is the amount of

One potential disadvantage of the reciprocal method is it could overstate the cost of running the organization's service departments.

Using the simultaneous solution method,department A's cost allocated to department C is

Harry Dorffman owns and operates Harry's Abstracting Service.Harry's two revenue generating operations (Abstracting Services and Closing Services)are supported by two service departments: Clerical and Custodial.Costs in the service departments are allocated in the following order using the designated allocation bases. Clerical: number of transactions processed Custodial: square footage of space occupied Average and expected activity levels for next month are as follows: Required: Use the direct method to allocate the service department costs to the revenue generating departments.Provide the total costs for the revenue departments.

Under the step method (Op first),what is the cost of the computer time and the computer programs for sale?

With the reciprocal method,the total service department costs less the direct costs of the service department equals the cost allocated to the service department.

The equation for department S2 (research and development)is

Harry Dorffman owns and operates Harry's Abstracting Service.Harry's two revenue generating operations (Abstracting Services and Closing Services)are supported by two service departments: Clerical and Custodial.Costs in the service departments are allocated in the following order using the designated allocation bases. Clerical: number of transactions processed Custodial: square footage of space occupied Average and expected activity levels for next month are as follows: Required: Use the reciprocal method to allocate the service department costs to the revenue generating departments.Provide the total costs for the revenue departments.

Joint products and byproducts are produced simultaneously by a single process or series of processes and

Under the reciprocal method what is the algebraic solution to the cost allocation problem?

LaCrescent University has 20 departments.Two of its best departments are the (1)College of UBW (Underwater Basket Weaving)and (2)Testing Services.The College of UBW attempts to teach students the difficult,but useful,skill of weaving baskets underwater.Testing Services grades examinations for professors.How would these two departments be classified?

Which of the following service departments could logically use space occupied (square footage)to allocate its costs to user departments?

Under the direct method of allocation,what is the total amount of service cost allocated to the Legal Advice operation for June? (Round all calculations to the nearest whole dollar.)

What is the cost of the Accounting Department's cost allocated to Department A using the stefp method and assuming the Maintenance Department's costs are allocated first?

Computer Information Services is a computer software consulting company.Its three major functional areas are computer programming,information systems consulting,and software training.Carol Birch,a pricing analyst in the Accounting Department,has been asked to develop total costs for the functional areas.These costs will be used as a guide in pricing a new contract.In computing these costs,Birch is considering three different methods of allocating overhead costs-the direct method,the step method,and the reciprocal method.Birch assembled the following data on overhead from its two service departments,the Information Systems Department and the Facilities Department. Information systems is allocated on the basis of hours of computer usage; facilities are allocated on the basis of floor space. Required: Allocate the service department costs to the user departments using the step method.Allocate Information Systems first and round to the nearest dollar.Provide total user department costs.

The equation for department P3 (marketing)is

Which of the following is the least practical reason for allocating service department costs to user departments?

Assuming that joint product costs are allocated using the net realizable value method,what were the total costs assigned to Product Y?

Castle Company has two service departments and two user departments.The number of employees in each department is The fixed costs of the Personnel Department are allocated on a basis of the number of employees.If these costs are budgeted at $37,125 during a given period,the amount of cost allocated to the Cafeteria under the step method would be

Assume Q is a by-product and Moody uses the cost reduction method of accounting for by-product cost.If estimated net realizable value is used,how much of the joint costs would be allocated to product R?