Exam 12: Cost Allocation

Lux Company processes copper ore into two products, C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Lux Company plans to produce 40,000 pounds of C and 20,000 pounds of U from 60,000 pounds of ore.C sells for $30 per pound and U sells for $40 per pound.Assuming the physical-units method of allocating joint costs, the amount of joints costs allocated to product U would be _____.

Cough Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs $70,000) pooled together to arrive at the following information: Number of Number of Number of Product Setups Components DLH Standard 20 15 375 Deluxe 30 45 225 Costs per pool \ 25,000 \ 45,000 \ 9,000 If activity?based costing is used, _____ is the overhead rate per component.

Cost allocation base refers to the _____.

Ranger Company produces three products from a joint process.Products Hee and Haw are considered main products.Product Rams is a by-product.Joint-processing costs should be allocated to _____.

Russell Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs $60,000) pooled together to arrive at the following information: Number of Number of Number of Product Setups Components DLH Standard 22 8 375 Deluxe 28 12 225 Costs per pool \ 15,000 \ 40,000 \ 9,000 If activity?based costing is used, the cost assigned to the deluxe model using the number of components would be _____.

The relative-sales-value method requires a common physical unit for measuring the output of each product.

Direct-labor hours are a good cost driver choice for overhead costs in modern, highly automated departments.

Costs are allocated for all the following purposes except to _____.

_____ is not a type of cost allocation.

A cost driver used for allocating costs

Examples of service departments include personnel, legal, and corporate accounting.

The preferred cost driver for central services is either actual or estimated usage.

Type 1 allocations are costs that flow from _____.

A method for allocating service department costs that ignores other service departments when any given service department's costs are allocated to the revenue-producing operating) departments

Bunny Company manufactures three products from a joint process.Joint costs for the year amounted to $250,000.The following data are also available: Sales Value at Product Units Produced Split-off 5,000 \ 70,000 3,000 \ 30,000 2,000 \ 100,000 Assuming the relative-sales-value method of allocating joint costs, the amount of joint costs allocated to product Z would be _____.

Lewis Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs pooled together to arrive at the following information: Number of Number of Number of Product Setups Components DLH Standard 20 15 375 Deluxe 30 45 225 Costs per pool \ 25,000 \ 36,000 \ 15,000 If a traditional costing system is used, _____ is the overall overhead rate using direct-labor hours.

This joint-cost allocation method can be used when one or more joint products cannot be sold at the split-off point

Direct-labor hours and machine hours are typical cost drivers in a traditional approach.

Thomas Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year: Maintenance Personnel Mixing Finishing Direct dept. costs \ 126,000 \ 84,000 \ 105,000 \ 175,000 Square footage 800 400 1,600 1,200 Number of employees 8 12 24 32 If the step-down method is used to allocate costs and the Maintenance Department is allocated first, then the cost of the Mixing Department after allocation would be _____.

Martin Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs $70,000) pooled together to arrive at the following information: Number of Number of Number of Product Setups Components DLH Standard 20 15 375 Deluxe 30 45 225 Costs per pool \ 25,000 \ 36,000 \ 12,000 If activity?based costing is used, _____ is the pool overhead rate per direct-labor hour.