Exam 7: Allocating Costs of Support Departments and Joint Products

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 is the gross profit of No. 3 common if the constant gross margin percentage method is used?

Morton Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $90,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $13,500 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $27,000 and $45,000, respectively. Data on standard service hours and number of employees are as follows: Maint. Person. Dept. Dept. Dest. Dept. Standard service hours used 200 150 1,200 600 Number of employees 25 50 75 75 Direct labor hours 250 250 1,000 500 Predetermined overhead rates for Departments X and Y, respectively, are based on direct labor hours. What is the overhead rate for Department X assuming the direct method is used?

A joint cost allocation method that would assign the same amount of cost per unit to two joint products that sell for $10 and $40, respectively, is the

The support department costs allocated to producing departments is assigned to individual products through the use of:

Examples of support departments include all of the following EXCEPT

Which of the following methods allocates a joint cost such that each product has the same cost of goods sold percentage?

The __________ charging rate combines variable and fixed costs of support departments.

If a support department's costs were budgeted to be $150,000 and actual costs incurred by the support department were $200,000, the total amount of the support department's costs that should be allocated to other departments is

Which of the following cost categories would most likely use machine hours as its activity driver?

Cumadin Corporation, which manufactures Products W, X, Y, and Z through a joint process costing $18,000, has the following data for 2018: Product Units Produced Sales Value at Split-Off 10,000 \ 5,000 6,000 2,500 16,000 3,000 Z 8,000 4,500 What is the amount of joint costs assigned to Product Y using the sales-value-at-split-off method?

Ely Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $60,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $9,000 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $18,000 and $30,000, respectively. Data on standard service hours and number of employees are as follows: Maint. Person. Dept. Dept. Dest. Dept. Standard service hours used 100 50 300 150 Number of employees 5 10 45 45 Direct labor hours 50 50 250 250 Predetermined overhead rates for Departments X and Y, respectively, are based on direct labor hours. What is the overhead rate for Department Y assuming the direct method is used?

Products with substantial value which are produced simultaneously by the same process up to a split-off point are called:

Garden of Eden Company manufactures two products, Brights and Dulls, from a joint process. A production run costs $50,000 and results in 250 units of Brights and 1,000 units of Dulls. Both products must be processed past the split-off point, incurring separable costs for Brights of $60 per unit and $40 per unit for Dulls. The market price is $250 for Brights and $200 for Dulls. What is the gross profit for Brights assuming the net realizable value method is used?

Garden of Eden Company manufactures two products, Brights and Dulls, from a joint process. A production run costs $50,000 and results in 250 units of Brights and 1,000 units of Dulls. Both products must be processed past the split-off point, incurring separable costs for Brights of $60 per unit and $40 per unit for Dulls. The market price is $250 for Brights and $200 for Dulls. What is the amount of joint costs allocated to Dulls using the constant gross margin percentage method?

Stronghold, Inc., operates a brochure business at two different locations. Stronghold, Inc., has one support department that is responsible for cleaning, service, and maintenance of its printing equipment. The costs of the support department are allocated to each brochure center on the basis of total brochures made. During the first month, the costs of the support department were expected to be $400,000. Of this amount, $120,000 is considered a fixed cost. During the month, the support department incurred actual variable costs of $256,000 and actual fixed costs of $144,000. Normal and actual activity (brochures made) are as follows: Brochure Center 1 Brochure Center 2 Normal activity (brochures) 1,200,000 800,000 Actual activity (brochures) 1,000,000 880,000 Support department costs NOT allocated to the two brochure centers are:

Long Distance Company's travel department had the following budgeted costs for the coming year: Variable costs $\quad \$ 34$ per trip Fixed costs $\quad \$ 143,360$ Yearly Trips Monthly Peak Trips West Sales Territory 110 trips 5 Midwest Sales Territory 170 trips 12 Southern Sales Territory 150 trips 15 Eastern Sales Territory 130 trips 8 The actual usage is given below: West Sales Territory 100 trips Midwest Sales Territory 150 trips Southern Sales Territory 160 trips Eastern Sales Territory 140 trips Using a single charging rate, determine the rate per trip.

Aquamarine company incurred $20,000 of common fixed costs and $80,000 of common variable costs. These costs are to be allocated to its two departments: Department A and Department B. Data on capacity provided and capacity used by the two departments follows: Capacity Provided Capacity Used Department in Hours in Hours A 600 550 B 400 450 Common fixed costs are allocated to Departments A and B on the basis of capacity provided, and common variable costs are allocated to Departments A and B on the basis of capacity used. The fixed and variable costs allocated to Department A are:

Support department costs are accounted for in which one of the following ways?

If the allocation is for product costing, the allocation of variable support department costs would be calculated as

Hanover and Trust, a large law firm, utilizes an internal centralized printing center to serve its three departments: Individuals, Corporate, Trust. The costs of the printing department include fixed costs of $69,190 and variable costs of $0.04 per page. Total estimated print pages are estimated to be 330,000 pages. Individuals are estimated to use 130,000; Corporate will use 165,000 and 35,000 from the trust area. Assuming a single charging rate is used, if the total pages printed were 340,000, which of the following statements is correct?