Exam 19: Support Department and Joint Cost Allocation

Using the sequential method, Pone Hill Company allocates Janitorial Department costs based on square footage serviced. It allocates Cafeteria Department costs based on the number of employees served. It has determined to allocate Janitorial costs before Cafeteria costs.It has the following information about its two service departments and two production departments, Cutting and Assembly: The percentage (proportional) usage of the Cafeteria Department by the Assembly Department is

Managers will often find it necessary to use a subjective determination regarding the most appropriate method to use for allocating joint costs.

Because support department costs are directly related to production, they are easily applied to products.

In which of the following scenarios would it be more appropriate to use the market value at split-off method of joint cost allocation?

One of the reasons that James Company needs to estimate the costs of its joint products is to determine selling prices for them.

Match each description below to the appropriate step in the six-step process for allocating support department costs to production departments (a-f) Not all steps will be used. -Select a cost driver for each department A)Step 1 B)Step 2 C)Step 3 D)Step 4 E)Step 5 F)Step 6

An example of the split-off point in a lumber mill that produces cut boards from raw timber is that point where

Using the performance report for Scotland Beauty Products (including support department and joint cost allocations), evaluate the performance of Michelle Tallerico, specifically noting the reasons she missed her target.

Using the direct method, Pone Hill Company allocates Janitorial Department costs based on square footage serviced. It allocates Cafeteria Department costs based on the number of employees served. It has the following information about its two service departments and two production departments, Cutting and Assembly: If the Cafeteria Department incurs costs of $500,000, how much of that cost is allocated to the Assembly Department?

Which of the following methods allocates joint costs using a measure such as pounds, gallons, or inches at the split-off point?

Joint costs are inseparable after the split-off point.

Jamison Company uses the reciprocal services method to allocate support department costs and has gathered the following information: What are the correct equations to represent (a) the total Janitorial (J) costs and (b) the total Cafeteria (C) costs?

Scotland Beauty Products manufactures face cream, body lotion, and liquid soap in a joint manufacturing process. At the split-off point, the company has 300 pounds of face cream, 200 pounds of body lotion, and 300 pounds of liquid soap and has incurred $200,000 in joint costs.Using the physical units method, allocate the joint costs to (a) face cream, (b) body lotion, and (c) liquid soap.

Which of the following explains why it is difficult to apply support department costs, such as janitorial services, to products?

When using multiple production department rates, all overhead costs are allocated to production departments and none of them are directly traced to support departments.

If a company considers support department costs to be facility-level costs, product costs may be inaccurate because certain products use support department services more heavily than others.

The direct, sequential, and reciprocal services methods of allocating support department costs to production departments using ABC require a three-step process.

None of the four common methods for allocating joint costs will consistently allocate joint costs more accurately than another.

Carolina, the accountant for Duke Manufacturing, tells her friend, Jacob, who works in customer service for Duke, that she is writing journal entries to transfer costs to products. Carolina is referring to the

McBride's Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. It also incorporates a processing time weight factor of 1 for the cream and 3 for the skimmed milk. The amount of this cost that will be allocated to cream using the weighted average method is