Exam 19: Support Department and Joint Cost Allocation

Which of the following statements is false about the order in which management determines the sequencing of support department allocations under the sequential method of allocating support department costs to production departments?

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: The percentage (proportional) usage of the Cafeteria Department by the Assembly Department is

Which of the following is a drawback in using a single plantwide rate to apply overhead to product costs?

The following scenarios are encountered by Lillie Manufacturing Company in its many production facilities around the country. As the managerial accountant, you are asked to choose an appropriate support department cost allocation method. Indicate whether the scenario warrants the use of a single plantwide rate, multiple production department rates, or activity-based costing. Use each method only once.a.Single plantwide rate b.Multiple production department rates c.Activity-based costing -Scenario 1: Lillie Manufacturing has a plant in Wisconsin that manufactures one product in one department with 25 employees and one plant manager. It runs one 8-hour shift a day.

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: How much of the Janitorial Department's $450,000 costs is allocated to the Cutting Department?

Support departments are sometimes called

Joint costs are inseparable

The reciprocal services method of allocating support department costs to production using the ABC method is the easiest and least accurate.

Match each description below to the appropriate method for allocating costs (a-c). -Overhead costs are first directly traced or distributed to support and production activities, then support activity costs are allocated to production activities based on the amount of support activity used by each production activity; production activity costs are applied to the products using cost drivers for each production activity. A)Single plantwide overhead rate B)Multiple production department rates C)Activity-based costing

The market value at split-off method of allocating joint costs is easy to apply because estimating market value at the split-off point is always possible and is very accurate.

When activity-based costing is used to apply overhead to products, support department costs are referred to as

A major drawback to using a single plantwide rate is that it is applied using a single driver for all overhead costs and it is unlikely that the driver is appropriate for every type of overhead.

Support departments are sometimes called production departments because the two terms mean the same thing.

The weighted average method uses weight factors in conjunction with physical measures because

The following list includes the six steps used when allocating support department costs to production departments regardless of the method (i.e., single plantwide rate, multiple production department rates, or activity-based costing) chosen. Put them in the correct order by letter.

Juana, a managerial accountant, notes to her colleague that she is reviewing spreadsheets to determine overhead costs that need to be transferred to support and production departments. Juana is working on the process to

Which of the following statements is false about joint manufacturing processes?

A single plantwide overhead application rate

Support department costs are applied to products as a part of

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 with a market value of $15 per pound, 200 pounds of body lotion with a market value of $13 per pound, and 300 pounds of liquid soap with a market value of $7 per pound and has incurred $200,000 in joint costs.Using the market value at split-off method, allocate the joint costs to (a) face cream, (b) body lotion, and (c) liquid soap. Round percentages in intermediate steps to the nearest whole percentage.