Imelda 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: \[\begin{array} { l l l l l } \text { Maintenance } & & \text { Personnel } & \text { Mixing } & \text { Finishing } \\ \text { Direct dept.costs } & \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \\ \text { Square footage } & 1,600 & 800 & 3,200 & 2,400 \\ \text { Number of employees } &16 & 24 & 48 & 64 \end{array}\] 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:

A) $54,600 B) $53,939 C) $50,400 D) $70,000 A) $54,600 B) $53,939 C) $50,400 D) $70,000

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 pooled together to arrive at the following information: \[\begin{array} { l l l l } \text { Product } & \begin{array} { l } \text { Number of } \\ \text { Setups } \end{array} & \begin{array} { l } \text { Number of } \\ \text { Components } \end{array} & \begin{array} { l } \text { Number of } \\ \text { DLH } \end{array} \\ \text { Standard } & 20 & 15 & 375 \\ \text { Deluxe } & 30 & 45 & 225 \\ \text { Costs per pool } & \$ 25,000 & \$ 36,000 & \$ 9,000 \end{array}\] If a traditional costing system is used, is the overall overhead rate using direct labor hours.

A) $150 B) $117 C) $60 D) $500 A) $150 B) $117 C) $60 D) $500

Kenneth 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: $\begin{array}{lllll} &\text { Maintenance }&\text { Personnel }&\text { Mixing }&\text { Finishing }\\ \text { Direct dept.costs }&\$126,000&\$105,000&\$175,000&\$84,000\\ \text { Square footage } & 800 & 400 & 1,600 & 1,200 \\ \text { Number of employees } &8 & 12 & 24 & 32 \end{array}$ If the step- down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Finishing is:

A) $105,000 B) $42,000 C) $31,500 D) $72,000 A) $105,000 B) $42,000 C) $31,500 D) $72,000

Roller 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: \[\begin{array} { l l l l l } \text { Maintenance } & & \text { Personnel } & \text { Mixing } & \text { Finishing } \\ \text { Direct dept.costs } & \$ 126,000 & \$ 84,000 & \$ 105,000 & \$ 175,000 \\ \text { Square footage } & 800 & 400 & 1,600 & 1,200 \\ \text { Number of employees } &8 & 12 & 24 & 32 \end{array}\] If the step- down method is used to allocate costs and the Personnel Department is allocated first, then the cost of the Finishing Department after allocation would be:

A) $277,000 B) $279,250 C) $275,500 D) $175,000 A) $277,000 B) $279,250 C) $275,500 D) $175,000

Spaniel Company manufactures three products from a joint process. Joint costs for the year amounted to $250,000. The following data are also available: \[\begin{array}{l}\begin{array} { l l l } &&\text { Sales Value at }\\ \text { Product } & \text { Units Produced } & \text { Split- off } \\ \text { X } & 5,000 & \$ 70,000 \\ \text { Y } & 3,000 & \$ 30,000 \\ \text { Z } & 2,000 & \$ 100,000 \end{array} \end{array}\] Assuming the relative- sales- value method of allocating joint costs, the amount of joint costs allocated to product X would be:

A) $87,500 B) $125,000 C) $70,000 D) $250,000 A) $87,500 B) $125,000 C) $70,000 D) $250,000

Steve 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: $\begin{array}{lllll} &\text { Maintenance }&\text { Personnel }&\text { Mixing }&\text { Finishing }\\ \text { Direct dept.costs }&\$126,000&\$105,000&\$175,000&\$84,000\\ \text { Square footage } & 800 & 400 & 1,600 & 1,200 \\ \text { Number of employees } &8 & 12 & 24 & 32 \end{array}$ If the direct method is used to allocate costs, the total cost of the Finishing Department after allocation would be:

A) $54,000 B) $277,000 C) $48,000 D) $175,000 A) $54,000 B) $277,000 C) $48,000 D) $175,000

Lyle 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: \[\begin{array} { l l l l l } \text { Maintenance } & & \text { Personnel } & \text { Mixing } & \text { Finishing } \\ \text { Direct dept.costs } & \$ 126,000 & \$ 105,000& \$ 175,000&\$84,000 \\ \text { Square footage } & 800&400&1,600&1,200 \\ \text { Number of employees } &8&12&24&32 \end{array}\] If the direct method is used to allocate costs, then the total cost of the Mixing Department after allocation would be:

A) $72,000 B) $36,143 C) $105,000 D) $213,000 A) $72,000 B) $36,143 C) $105,000 D) $213,000

Coaster Company has two service department, 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: \[\begin{array} { l l l l l } \text { Maintenance } & & \text { Personnel } & \text { Mixing } & \text { Finishing } \\ \text { Direct dept.costs } & \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \\ \text { Square footage } & 1,600 & 800 & 3,200 & 2,400 \\ \text { Number of employees } 16 & 24 & 48 & 64 \end{array}\] If the direct method is used to allocate costs, then the cost of the Personnel Department after the Maintenance Department cost allocation would be:

A) $33,600 B) $38,640 C) $39,900 D) $63,840 A) $33,600 B) $38,640 C) $39,900 D) $63,840

Exam 12: Cost Allocation

Imelda 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:

(Multiple Choice)

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Question 121

Type 2 allocations are cost that flow from:

(Multiple Choice)

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Question 122

The cost of operating the Quality Control Department of Ankeny Manufacturing includes $650,000 of fixed costs and $550,000 of variable costs. The department normally budgets 20,000 inspection hours a year. Two departments, Fabrication and Assembly, receive quality control checks. Fabrication is budgeted at 1,000 hours a month, while Assembly is budgeted the remainder. In August, Fabrication used 1,200 inspection hours and Assembly used 900 hours. How much did each department receive in quality control costs, assuming a single rate is used based on budgeted hours?

(Essay)

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Question 123

The use of actual cost rates for allocating variable costs of service departments protects the user departments from intervening price fluctuations.

(True/False)

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Question 124

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 pooled together to arrive at the following information: Product Number of Setups Number of Components Number of DLH Standard 20 15 375 Deluxe 30 45 225 Costs per pool \ 25,000 \ 36,000 \ 9,000 If a traditional costing system is used, is the overall overhead rate using direct labor hours.

(Multiple Choice)

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Question 125

is the least likely alternative to be used to allocate costs.

(Multiple Choice)

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Question 126

Revenues less costs solely associated with by- products are added to the cost of the main products.

(True/False)

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Question 127

The preferred cost driver for allocating central costs

(Short Answer)

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Question 128

Kenneth 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 \1 26,000 \1 05,000 \1 75,000 \8 4,000 Square footage 800 400 1,600 1,200 Number of employees 8 12 24 32 If the step- down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Finishing is:

(Multiple Choice)

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Question 129

Roller 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 Personnel Department is allocated first, then the cost of the Finishing Department after allocation would be:

(Multiple Choice)

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Question 130

Cost distribution is the allocation of total departmental costs to the revenue- producing products or services.

(True/False)

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Question 131

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

(True/False)

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Question 132

Spaniel 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 X 5,000 \ 70,000 Y 3,000 \ 30,000 Z 2,000 \ 100,000 Assuming the relative- sales- value method of allocating joint costs, the amount of joint costs allocated to product X would be:

(Multiple Choice)

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Question 133

Steve 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 \1 26,000 \1 05,000 \1 75,000 \8 4,000 Square footage 800 400 1,600 1,200 Number of employees 8 12 24 32 If the direct method is used to allocate costs, the total cost of the Finishing Department after allocation would be:

(Multiple Choice)

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Question 134

A process map represents the flow of activities, resources, and their interrelationships.

(True/False)

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Question 135

Lyle 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 \ 105,000 \ 175,000 \8 4,000 Square footage 800 400 1,600 1,200 Number of employees 8 12 24 32 If the direct method is used to allocate costs, then the total cost of the Mixing Department after allocation would be:

(Multiple Choice)

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Question 136

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

(Short Answer)

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Question 137

Coaster Company has two service department, 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 Personnel Department after the Maintenance Department cost allocation would be:

(Multiple Choice)

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Question 138

The preferred cost drivers for fixed- cost pools and variable- cost pools are .

(Multiple Choice)

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Question 139

is not a type of cost allocation.

(Multiple Choice)

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Question 140

Type 2 allocations are cost that flow from:

The use of actual cost rates for allocating variable costs of service departments protects the user departments from intervening price fluctuations.

is the least likely alternative to be used to allocate costs.

Revenues less costs solely associated with by- products are added to the cost of the main products.

The preferred cost driver for allocating central costs

Cost distribution is the allocation of total departmental costs to the revenue- producing products or services.

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

A process map represents the flow of activities, resources, and their interrelationships.

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

The preferred cost drivers for fixed- cost pools and variable- cost pools are .

is not a type of cost allocation.

Managerial Accounting and the Business Organization

Introduction to Cost Behavior and Cost Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information and Decision-Making: Marketing Decisions

Relevant Information and Decision-Making: Product Decisions

The Master Budget

Flexible Budget and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Job-Costing

Process-Costing Systems

Overhead Application: Variable and Absorbtion Costing

Basic Accounting Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

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