Exam 7: Allocating Costs of Support Departments and Joint Products

Golden Leaves Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $30,000 are allocated on the basis of standard service used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows: MD PD P1 P2 Standard service hours used 100 50 300 150 Number of employees 10 20 90 90 Direct labor hours 50 50 250 250 Using the direct method, the cost of the Personnel Department allocated to Department P1 is:

Common costs are mutually beneficial costs, used in the output of two or more services or products.

Which of the following joint cost allocation methods recognizes that costs incurred after the split-off point are part of the cost total on which profit is expected to be earned?

Impacto Corporation produces four products in a joint process for $650,000. The following information is available on total sales and production in units: Products Sales Production 1,000 4,000 L 2,000 5,000 E 3,000 7,000 S 4,000 8,000 What amount of joint costs will be allocated to I based on the physical units method?

Carson Wood Products processes logs into four grades of lumber totaling 500,000 board feet as follows at a joint cost of $300,000: Grade Board Feet Final Sales Value First and second 75,000 \ 56,250 No. 1 common 200,000 180,000 No. 2 common 100,000 105,000 No. 3 common 125,000 127,500 What amount of joint costs will be allocated to No. 2 common using the constant gross margin percentage method?

Oxide Company has two support departments (S1 and S2) and two producing departments (X and Y). Department S1 serves Departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%. Department S2 serves Departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%. Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively. What is S2's cost equation?

__________ are mutually beneficial costs to joint product costing.

The weight factor addresses the advantages of the physical units method.

The sales-value-at-split-off method allocates joint production costs based on each product's share of

Which of the following allocation methods fully recognizes services that support departments provide to each other?

The activities or variables within a producing department that provoke the incurrence of support costs are called:

Rodriguez Manufacturing prices its products at full cost plus 40 percent. The company operates two support departments and two producing departments. Budgeted costs and normal activity levels are as follows: Support Departments Producing Departments A B C D Overhead costs \ 20,000 \ 50,000 \ 90,000 \ 120,000 Square feet 2,000 2,400 4,000 12,000 Number of employees 20 30 60 40 Direct labor hours - - 10,000 6,400 Machine hours - - 6,000 10,800 Support Department A's costs are allocated based on square feet, and Support Department B's costs are allocated based on number of employees. Department C uses direct labor hours to assign overhead costs to products, while Department D uses machine hours. One of the products the company produces requires 4 direct labor hours per unit in Department C and no time in Department D. Direct materials for the Product cost $45 per unit, and direct labor is $20 per unit. If the sequential method of allocation is used and the company follows its usual pricing policy, the selling price of the product would be (round service allocations to the nearest whole dollar and the costs per unit to two decimal places)

The split-off point is the ending point of a joint product process.

A secondary product recovered in the course of manufacturing a primary product during a joint process is called a:

Fairfield Company allocates common Building Department costs to producing departments (P1 and P2) based on space occupied, and it allocates common Personnel Department costs based on the number of employees. Space occupancy and employee data are as follows: Building Personnel Dept. P1 Dept. P2 Space occupied 2,000 10,000 120,000 70,000 Employees 6 10 80 50 If Fairfield Company uses the direct allocation method, the ratio representing the portion of building costs allocated to Department P1 is

Joint production processes result in the output of two or more products produced simultaneously.

Andover,, Inc., has two producing departments. Each producing department is held responsible for a share of the costs of a support department. Actual and budgeted data are as follows: $\text { Support department hours used: }$ Department L 12,000 Department M 4,000 Total hours Support department costs: Actual support department costs \ 48,000 Budgeted fixed department costs \ 20,000 Budgeted variable rate per hour \ 2.50 Normal support department usage is 8,000 hours each for Department L and Department M. Assuming the direct method is used and the purpose is product costing, support department costs allocated to Department L are

Alpha Corp. prices its products at full cost plus 25 percent. The company has two support departments and two producing departments. Budgeted costs and normal activity levels are as follows: Support Departments Producing Departments S1 S2 P1 P2 Overhead costs \ 15,000 \ 27,000 \ 250,000 \ 200,000 Square feet 900 1,100 4,000 8,000 Number of employees 12 28 100 80 Direct labor hours - - 9,000 10,000 Machine hours - - 12,000 8,000 S1 Department's costs are allocated based on square feet, and S2 Department's costs are allocated based on number of employees. P1 Department uses direct labor hours to assign overhead costs to products and P2 Department uses machine hours. Alpha manufactures Product X, each unit of which requires 5 direct labor hours in P1 Department and no time in P2 Department. Direct materials per unit of Product X cost $200, and direct labor is $110 per unit. Determine the selling price of Product X, if the direct method of allocation is used and the company follows its usual pricing policy.

After allocation, total overhead in producing department is divided by the budgeted measure of activity to get the __________ overhead rate.

Abound Company has two support departments (S1 and S2) and two producing departments (X and Y). Department S1 serves Departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%. Department S2 serves Departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%. Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively. What are the total costs to be allocated from Department S1?