Question 1

For purposes of allocating joint costs to joint products,the estimated net realizable value at split-off is equal to

Accepted Answer

A) final sales price reduced by cost to complete after split-off. 
B) sales price less a normal profit margin at the point of sale. 
C) separable product cost plus a normal profit margin. 
D) total sales value less joint costs at point of split-off. 
A) final sales price reduced by cost to complete after split-off. 
B) sales price less a normal profit margin at the point of sale. 
C) separable product cost plus a normal profit margin. 
D) total sales value less joint costs at point of split-off.

Question 2

The step method allocates some,but not all,service department costs to other service departments.

Accepted Answer

A) True 
 B)False

Question 3

Service department costs are

Accepted Answer

A) generally treated as period costs rather than product costs. 
B) reported as selling and administrative expenses on the income statement. 
C) eventually applied by the user departments to the units produced. 
D) seldom found in manufacturing organizations. 
A) generally treated as period costs rather than product costs. 
B) reported as selling and administrative expenses on the income statement. 
C) eventually applied by the user departments to the units produced. 
D) seldom found in manufacturing organizations.

Question 4

How much rent would be charged to S4 using the step method of allocation and a S3-S4-S1-S2 sequence for the allocations?

Accepted Answer

A) $36,000 
B) $40,000 
C) $54,000 
D) $90,000 
A) $36,000 
B) $40,000 
C) $54,000 
D) $90,000

Question 5

Which of the following statements is (are)false regarding the direct method of allocating service department costs? (A)The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method.
(B)Once an allocation is made from a service department using the direct method,no further allocations are made back to that department.

Accepted Answer

A) Only A is false. 
B) Only B is false. 
C) Neither A nor B is false. 
D) Both A and B are false. 
A) Only A is false. 
B) Only B is false. 
C) Neither A nor B is false. 
D) Both A and B are false.

Question 6

Products X,Y,and Z are produced from the same process at a cost of $5,200.Five thousand pounds of raw material yields 1,500 X,2,500 Y,and 1,000 Z.Selling prices are: X $2 per unit,Y $4 per unit,Z valueless.The ending inventory of X is 50 units.What is the value of the ending inventory if joint costs are allocated using net realizable value?

Accepted Answer

A) $21.67. 
B) $31.20. 
C) $40.00. 
D) $42.00. 
A) $21.67. 
B) $31.20. 
C) $40.00. 
D) $42.00.

Question 7

How much rent is allocable to the assembly department using the direct method of allocation?

Accepted Answer

A) $420,000 
B) $332,500 
C) $300,000 
D) $252,000 
A) $420,000 
B) $332,500 
C) $300,000 
D) $252,000

Question 8

Under the step method of allocation,how much Clerical service cost should be allocated to the Septic Service operation for June? (Assume Clerical costs are allocated before Janitorial costs and round all calculations to the nearest whole dollar.)

Accepted Answer

A) $12,689 
B) $13,100 
C) $13,620 
D) $15,596 
E) $16,070 
A) $12,689 
B) $13,100 
C) $13,620 
D) $15,596 
E) $16,070

Question 9

The equation for department P1 (subassemblies)is

Accepted Answer

A) P1 = $550,000 + .25P2 + .20P3 + .15S2 + 10S3. 
B) P1 = $550,000 + .30S1 + .50S2 + .20S3. 
C) P1 = .30S1 + .50S2 + 20S3. 
D) P1 = .30S1 + .50S. 
A) P1 = $550,000 + .25P2 + .20P3 + .15S2 + 10S3. 
B) P1 = $550,000 + .30S1 + .50S2 + .20S3. 
C) P1 = .30S1 + .50S2 + 20S3. 
D) P1 = .30S1 + .50S.

Question 10

Which of the following statements is false?

Accepted Answer

A) The estimated net realizable value for a product is its estimated selling price after processing the product beyond the split-off point. 
B) In general,it is better to use a product's market value at the split-off point than its estimated net realizable value. 
C) The estimated net realizable value at the split-off point is calculated by taking the sales value after further processing and deducting the additional processing costs. 
D) It is better to use the net realizable value method for allocating joint costs than the estimated net realizable value method. 
A) The estimated net realizable value for a product is its estimated selling price after processing the product beyond the split-off point. 
B) In general,it is better to use a product's market value at the split-off point than its estimated net realizable value. 
C) The estimated net realizable value at the split-off point is calculated by taking the sales value after further processing and deducting the additional processing costs. 
D) It is better to use the net realizable value method for allocating joint costs than the estimated net realizable value method.

Question 11

Joint products are outputs from common inputs and a common production process.

Accepted Answer

A) True 
 B)False

Question 12

The direct method makes no cost allocations between or among service departments.

Accepted Answer

A) True 
 B)False

Question 13

The Freed Company produces three products,X,Y,and Z from a single raw material input.Product Y can be sold at the split-off point for total revenues of $50,000 or it can be processed further at a total cost of $16,000 and then sold for $68,000.Product Y

Accepted Answer

A) should be sold at the split-off point,rather than processed further. 
B) would increase the company's overall net income by $18,000 if processed further and then sold. 
C) would increase the company's overall net income by $68,000 if processed further and then sold. 
D) would increase the company's overall net income by $2,000 if processed further and then sold. 
A) should be sold at the split-off point,rather than processed further. 
B) would increase the company's overall net income by $18,000 if processed further and then sold. 
C) would increase the company's overall net income by $68,000 if processed further and then sold. 
D) would increase the company's overall net income by $2,000 if processed further and then sold.

Question 14

Bagley Company has two service departments and two producing departments.Square footage of space occupied by each department follows: The department costs of Custodial Services are allocated on a basis of square footage of space.If Custodial Services costs are budgeted at $38,000,the amount of cost allocated to General Administration under the direct method would be

Accepted Answer

A) $0. 
B) $7,125. 
C) $6,000. 
D) $5,700. 
A) $0. 
B) $7,125. 
C) $6,000. 
D) $5,700.

Question 15

If common computer service costs are allocated using computer time as the allocation basis,what is the computer cost allocated to Division B?

Accepted Answer

A) $136,190 
B) $137,647 
C) $144,444 
D) $173,333 
A) $136,190 
B) $137,647 
C) $144,444 
D) $173,333

Question 16

Criteria for selecting allocation bases for service department allocations should not include

Accepted Answer

A) direct,traceable benefits from the service. 
B) the extent of facilities provided. 
C) the ease of making an allocation. 
D) sales dollars generated during the period. 
A) direct,traceable benefits from the service. 
B) the extent of facilities provided. 
C) the ease of making an allocation. 
D) sales dollars generated during the period.

Question 17

The physical quantities method allocates joint costs so that each joint product has the same gross margin as a percentage of sales.

Accepted Answer

A) True 
 B)False

Question 18

A management purpose for allocating joint costs of a processing center to the various products produced is to

Accepted Answer

A) establish inventory values for unsold units. 
B) record accurate cost of sales by product line. 
C) compute total processing cost variances by product. 
D) report correct standard product costs for comparative analysis. 
A) establish inventory values for unsold units. 
B) record accurate cost of sales by product line. 
C) compute total processing cost variances by product. 
D) report correct standard product costs for comparative analysis.

Question 19

For the purposes of allocating joint costs to joint products,the sales price at the point of sale,reduced by the cost to complete after split-off,is assumed to be equal to the (CPA adapted)

Accepted Answer

A) total costs. 
B) joint costs. 
C) sales price less a normal profit margin at point of sale. 
D) relative sales value at split-off. 
A) total costs. 
B) joint costs. 
C) sales price less a normal profit margin at point of sale. 
D) relative sales value at split-off.

Question 20

Castle Company has two service departments and two producing departments.The number of employees in each department is The department 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 Department B under the direct method would be

Accepted Answer

A) $0. 
B) $17,187.50. 
C) $16,875.00. 
D) $18,021.84. 
A) $0. 
B) $17,187.50. 
C) $16,875.00. 
D) $18,021.84.

For purposes of allocating joint costs to joint products,the estimated net realizable value at split-off is equal to

The step method allocates some,but not all,service department costs to other service departments.

Service department costs are

How much rent would be charged to S4 using the step method of allocation and a S3-S4-S1-S2 sequence for the allocations?

How much rent is allocable to the assembly department using the direct method of allocation?

Under the step method of allocation,how much Clerical service cost should be allocated to the Septic Service operation for June? (Assume Clerical costs are allocated before Janitorial costs and round all calculations to the nearest whole dollar.)

The equation for department P1 (subassemblies)is

Which of the following statements is false?

Joint products are outputs from common inputs and a common production process.

The direct method makes no cost allocations between or among service departments.

The Freed Company produces three products,X,Y,and Z from a single raw material input.Product Y can be sold at the split-off point for total revenues of $50,000 or it can be processed further at a total cost of $16,000 and then sold for $68,000.Product Y

If common computer service costs are allocated using computer time as the allocation basis,what is the computer cost allocated to Division B?

Criteria for selecting allocation bases for service department allocations should not include

The physical quantities method allocates joint costs so that each joint product has the same gross margin as a percentage of sales.

A management purpose for allocating joint costs of a processing center to the various products produced is to

For the purposes of allocating joint costs to joint products,the sales price at the point of sale,reduced by the cost to complete after split-off,is assumed to be equal to the (CPA adapted)

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Nonfinancial and Multiple Measures of Performance

Filters

Exam 11: Service Department and Joint Cost Allocation

For purposes of allocating joint costs to joint products,the estimated net realizable value at split-off is equal to

The step method allocates some,but not all,service department costs to other service departments.

Service department costs are

How much rent would be charged to S4 using the step method of allocation and a S3-S4-S1-S2 sequence for the allocations?

How much rent is allocable to the assembly department using the direct method of allocation?

Under the step method of allocation,how much Clerical service cost should be allocated to the Septic Service operation for June? (Assume Clerical costs are allocated before Janitorial costs and round all calculations to the nearest whole dollar.)

The equation for department P1 (subassemblies)is

Which of the following statements is false?

Joint products are outputs from common inputs and a common production process.

The direct method makes no cost allocations between or among service departments.

The Freed Company produces three products,X,Y,and Z from a single raw material input.Product Y can be sold at the split-off point for total revenues of $50,000 or it can be processed further at a total cost of $16,000 and then sold for $68,000.Product Y

If common computer service costs are allocated using computer time as the allocation basis,what is the computer cost allocated to Division B?

Criteria for selecting allocation bases for service department allocations should not include

The physical quantities method allocates joint costs so that each joint product has the same gross margin as a percentage of sales.

A management purpose for allocating joint costs of a processing center to the various products produced is to

For the purposes of allocating joint costs to joint products,the sales price at the point of sale,reduced by the cost to complete after split-off,is assumed to be equal to the (CPA adapted)

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Nonfinancial and Multiple Measures of Performance

Filters