Question 1

In general,it is better to use a product's market value at the split-off point than its estimated net realizable value in allocating joint costs.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following methods provides no data for service departments to monitor each other's costs?

Accepted Answer

A) Direct method. 
B) Reciprocal method. 
C) Step method. 
D) All three methods,Direct,Reciprocal,and Step,provide data for monitoring costs. 
A) Direct method. 
B) Reciprocal method. 
C) Step method. 
D) All three methods,Direct,Reciprocal,and Step,provide data for monitoring costs.

Question 3

Which of the following best describes the objective of joint cost allocation?

Accepted Answer

A) Inventory valuation. 
B) Pricing goods for sale. 
C) Making decisions about levels of production. 
D) Making decisions about raw materials requirements. 
A) Inventory valuation. 
B) Pricing goods for sale. 
C) Making decisions about levels of production. 
D) Making decisions about raw materials requirements.

Question 4

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 direct method.(Round to the nearest dollar and provide total user department costs)

Accepted Answer

Computer programming

Question 5

If joint costs are allocated based on relative weight of the outputs and all products are main products,how much of the joint costs would be allocated to product P?

Accepted Answer

A) $43,750 
B) $50,000 
C) $60,000 
D) $62,500 
A) $43,750 
B) $50,000 
C) $60,000 
D) $62,500

Question 6

Anchorage Company manufactures three main products,L,M and N,from a joint process.Additional information for June production activity follows: Assuming that the 10,000 units of N were processed further and sold for $78,000 what was Anchorage's gross profit from this sale? Assume the physical quantities method of allocation is used.

Accepted Answer

A) $21,000 
B) $28,500 
C) $30,000 
D) $66,000 
A) $21,000 
B) $28,500 
C) $30,000 
D) $66,000

Question 7

Because this allocation method recognizes that service departments often provide each other with inter-departmental service,it is theoretically considered to be the most accurate method for allocating service department costs to production departments.This method is: (CMA adapted)

Accepted Answer

A) direct method. 
B) variable method. 
C) linear method. 
D) reciprocal method. 
E) step-down method. 
A) direct method. 
B) variable method. 
C) linear method. 
D) reciprocal method. 
E) step-down method.

Question 8

Which of the following cost items is not allocable as joint costs when a single manufacturing process produces several main products and several by-products?

Accepted Answer

A) Direct materials 
B) Variable overhead 
C) Direct labor 
D) Fixed overhead 
E) Freight-out 
A) Direct materials 
B) Variable overhead 
C) Direct labor 
D) Fixed overhead 
E) Freight-out

Question 9

If all common costs are allocated using operating profit as the allocation basis,what is the total cost allocated to Division B?

Accepted Answer

A) $457,286 
B) $512,714 
C) $555,000 
D) $1,087,576 
A) $457,286 
B) $512,714 
C) $555,000 
D) $1,087,576

Question 10

Zebra Manufacturing Company incurred a joint cost of $600,000 in the production of R and S in a joint process.Presently,1,800 of R and 1,400 of S are being produced each month.Management plans to decrease R's production by 300 units in order to increase the production of S by 500 units.Additionally,this change will require minor modifications,which will add $20,000 to the joint cost.This cost is entirely attributable to product S.What is the amount of the joint costs allocable to R and S before changes to existing production assuming Zebra allocates their joint costs according to the proportion of S and R produced?

Accepted Answer

A) a 
B) b 
C) c 
D) d 
A) a 
B) b 
C) c 
D) d

Question 11

In a sell-or-process-further decision,the additional costs incurred after the split-off point are irrelevant.

Accepted Answer

A) True 
 B)False

Question 12

Net realizable value at the split-off point is used to allocate

Accepted Answer

A) a 
B) b 
C) c 
D) d 
A) a 
B) b 
C) c 
D) d

Question 13

The physical quantities method of allocating joint costs is often used when the output sales prices are highly volatile.

Accepted Answer

A) True 
 B)False

Question 14

The method of accounting for joint product costs that will produce the same gross margin percentage for all products is the

Accepted Answer

A) replacement method. 
B) physical quantities method. 
C) net realizable value method. 
D) units produced method. 
A) replacement method. 
B) physical quantities method. 
C) net realizable value method. 
D) units produced method.

Question 15

The equation for department S1 (building occupancy)is

Accepted Answer

A) S1 = .10S3. 
B) S1 = $85,000 + 1.00S3. 
C) S1 = $85,000 + .10S3. 
D) S1 = $85,000 + .90S2 + .10S3. 
A) S1 = .10S3. 
B) S1 = $85,000 + 1.00S3. 
C) S1 = $85,000 + .10S3. 
D) S1 = $85,000 + .90S2 + .10S3.

Question 16

The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method.

Accepted Answer

A) True 
 B)False

Question 17

What is the Maintenance Department's cost allocated to Department B using the step method and assuming the Maintenance Department's costs are allocated first?

Accepted Answer

A) $276,000 
B) $230,000 
C) $322,000 
D) $23,810 
A) $276,000 
B) $230,000 
C) $322,000 
D) $23,810

Question 18

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 reciprocal method.Round to the nearest dollar.

Accepted Answer

Computer Programming

Question 19

One advantage of the step method is that all reciprocal services are recognized between service departments.

Accepted Answer

A) True 
 B)False

Question 20

What is the Maintenance Department's cost allocated to Department A using the direct method?

Accepted Answer

A) $92,000 
B) $230,000 
C) $276,000 
D) $386,400 
A) $92,000 
B) $230,000 
C) $276,000 
D) $386,400

In general,it is better to use a product's market value at the split-off point than its estimated net realizable value in allocating joint costs.

Which of the following methods provides no data for service departments to monitor each other's costs?

Which of the following best describes the objective of joint cost allocation?

If joint costs are allocated based on relative weight of the outputs and all products are main products,how much of the joint costs would be allocated to product P?

Because this allocation method recognizes that service departments often provide each other with inter-departmental service,it is theoretically considered to be the most accurate method for allocating service department costs to production departments.This method is: (CMA adapted)

Which of the following cost items is not allocable as joint costs when a single manufacturing process produces several main products and several by-products?

If all common costs are allocated using operating profit as the allocation basis,what is the total cost allocated to Division B?

In a sell-or-process-further decision,the additional costs incurred after the split-off point are irrelevant.

Net realizable value at the split-off point is used to allocate

The physical quantities method of allocating joint costs is often used when the output sales prices are highly volatile.

The method of accounting for joint product costs that will produce the same gross margin percentage for all products is the

The equation for department S1 (building occupancy)is

The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method.

What is the Maintenance Department's cost allocated to Department B using the step method and assuming the Maintenance Department's costs are allocated first?

One advantage of the step method is that all reciprocal services are recognized between service departments.

What is the Maintenance Department's cost allocated to Department A using the direct method?

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

In general,it is better to use a product's market value at the split-off point than its estimated net realizable value in allocating joint costs.

Which of the following methods provides no data for service departments to monitor each other's costs?

Which of the following best describes the objective of joint cost allocation?

If joint costs are allocated based on relative weight of the outputs and all products are main products,how much of the joint costs would be allocated to product P?

Because this allocation method recognizes that service departments often provide each other with inter-departmental service,it is theoretically considered to be the most accurate method for allocating service department costs to production departments.This method is: (CMA adapted)

Which of the following cost items is not allocable as joint costs when a single manufacturing process produces several main products and several by-products?

If all common costs are allocated using operating profit as the allocation basis,what is the total cost allocated to Division B?

In a sell-or-process-further decision,the additional costs incurred after the split-off point are irrelevant.

Net realizable value at the split-off point is used to allocate

The physical quantities method of allocating joint costs is often used when the output sales prices are highly volatile.

The method of accounting for joint product costs that will produce the same gross margin percentage for all products is the

The equation for department S1 (building occupancy)is

The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method.

What is the Maintenance Department's cost allocated to Department B using the step method and assuming the Maintenance Department's costs are allocated first?

One advantage of the step method is that all reciprocal services are recognized between service departments.

What is the Maintenance Department's cost allocated to Department A using the direct method?

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