Exam 12: Cost Allocation

Alleluia 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 \ 50,400 \ 33,600 \ 42,000 \ 70,000 Square footage 1,600 800 3,200 2,400 Number of employees 16 24 48 64 If the direct method is used to allocate costs, then the cost of the amount of overhead allocated from Maintenance to Mixing would be _____.

Marcos 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 \ 50,400 \ 33,600 \ 42,000 \ 70,000 Square footage 1,600 800 3,200 2,400 Number of employees 16 24 48 64 If the direct method is used to allocate costs, then the total cost of the Maintenance Department after the Personnel Department cost allocation would be:

Cavaliers Company manufactures two sizes of its frying pan, a Tiny and a Huge model.Three activities have been identified as cost drivers and the related costs pooled together to arrive at the following information: Product Number of Material Requisitions Number of Product Inspections Number of Orders Shipped Tiny 184 100 668 Huge 248 100 516 Costs per pool \ 54,000 \ 32,800 \ 103,000 Required: Assuming activity?based costing is used, allocate each cost pool to each model.

Variable and fixed-service department costs should be allocated separately.

Joint cost allocations should be ignored for decisions such as selling a joint product or processing it further.

Martinez 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 \ 50,400 \ 33,600 \ 42,000 \ 70,000 Square footage 1,600 800 3,200 2,400 Number of employees 16 24 48 64 If the step?down method is used to allocate costs and the Maintenance Department is allocated first, then the amount of overhead that would be allocated from Personnel to Maintenance is _____.

The preferred guidelines for allocating service department costs include _____.

The _____ method is a method for allocating service department costs that ignores other service department's costs when any given service department's costs are allocated to the revenue-producing departments.

In the dual method of allocation, fixed costs should be allocated using budgeted cost rates times the actual cost driver level.

A cost accounting system first assigns costs to organizational units and then accumulates these costs within the unit.

When using the step-down method, once a service department's costs are allocated to other departments, nothing is ever allocated back to it.

If a company allocated fixed costs based on long-run plans, there is a tendency on the part of managers to underestimate their planned usage.

Cost application refers to costs allocated to _____.

The cost pool should be a quantifiable measure of what causes costs.

Allocation of costs to cost objectives may be described as apportion or attribute.

The names of two popular methods for allocating service department costs are the direct method and the step-up method.

Strongsville College recently leased a photocopy machine for $2,000 per month plus $0.04 per copy.Additional variable operating costs were $0.02 per copy.Strongsville College estimated it would produce 30,000 copies per month.The Accounting Department estimated it would produce 6,000 copies, but actually produced only 4,000 copies.If fixed and variable cost pools are allocated separately, then the amount of fixed costs allocated to the Accounting Department should be _____.

Ankeny College recently leased a photocopy machine for $1,500 per month plus $0.04 per copy.Additional variable operating costs were $0.02 per copy.Ankeny College estimated it would produce 30,000 copies per month.The Accounting Department estimated it would produce 6,000 copies, but actually produced only 5,000 copies.If fixed and variable-cost pools are allocated separately, then _____ is the amount of variable cost allocated to the Accounting Department:

Reciprocal services are services provided by a service department to _____.

If the vast majority of costs were directly traceable, then cost allocation would be a minor issue.