Question 1

The Maintenance Department that services machines used in the production process is an example of a support department.

Accepted Answer

A) True 
 B)False

Question 2

Departmental information for the four departments at Samoa Industries is provided below.​   The Janitorial and Cafeteria departments are support departments. Determine the dollar amount of the Janitorial Department costs to be allocated to the (a) Cutting and (b) Assembly departments using the direct method.

Accepted Answer

a. 4,000 ÷ (4,000 + 16,000) =

Question 3

Johnson Lumber Mill produces various grades of cut boards from raw lumber. The costs incurred once the cut boards are separated and processed further are

Accepted Answer

A) investment center costs 
B) joint costs that cannot be separated 
C) new costs that can be traced to the various grades of lumber being produced 
D) new costs that cannot be traced to the various grades of lumber being produced 
A) investment center costs 
B) joint costs that cannot be separated 
C) new costs that can be traced to the various grades of lumber being produced 
D) new costs that cannot be traced to the various grades of lumber being produced

Question 4

Under the reciprocal services method of allocating support department costs to production departments using ABC, all inter-support-department services are considered in the allocation process.

Accepted Answer

A) True 
 B)False

Question 5

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 skimmed milk using the weighted average method is

Accepted Answer

A) $1,000 
B) $900 
C) $100 
D) $750 
A) $1,000 
B) $900 
C) $100 
D) $750

Question 6

Jamison Company uses the reciprocal services method to allocate support department costs and has gathered the following information:   What is the total Janitorial Department cost using the reciprocal services method?

Accepted Answer

J = $450,000 + (20% × C)C = $2

Question 7

Which of the following statements is true about the sequential method of allocating support department costs to production departments?

Accepted Answer

A) The sequential method is also known as the step-up method. 
B) The sequential method captures some but not all the inter-support-department services by allocating support departments to other support departments and production departments in a series of steps. 
C) The sequential method requires that the same cost driver be used for each support department. 
D) The sequential method is less accurate than the direct method. 
A) The sequential method is also known as the step-up method. 
B) The sequential method captures some but not all the inter-support-department services by allocating support departments to other support departments and production departments in a series of steps. 
C) The sequential method requires that the same cost driver be used for each support department. 
D) The sequential method is less accurate than the direct method.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

In activity-based costing, support department costs are referred to as support activity costs.

Accepted Answer

A) True 
 B)False

Question 10

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 2: Lillie Manufacturing has a plant in Minnesota that has five support departments that all have several activities performed within the departments. It has seven production departments that build very complex multistep products that require many production activities. This plant employs 5,000 people in the production facility and has three 8-hour shifts running six days a week.

Accepted Answer

The answer of The following scenarios are encountered by Lillie...

Question 11

McBride's Dairy has 200 gallons of heavy cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. It can sell each product at the split-off point or process it further in relatively similar processes, so management has decided that the most appropriate method for allocating joint costs is the market value at split-off point. One gallon of cream sells for $15, while one gallon of milk sells for $4. How much of the joint cost is allocated to cream? Round percentage calculations to the nearest whole percent.

Accepted Answer

A) $1,000 
B) $560 
C) $440 
D) $0 
A) $1,000 
B) $560 
C) $440 
D) $0

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 weighted average method, allocate the joint costs to (a) face cream with a weight factor of 1, (b) body lotion with a weight factor of 3, and (c) liquid soap with a weight factor of 1.

Accepted Answer

a.face cream: {(300 × 1) ÷ [(300 × 1) +

Question 14

Which of the following is the correct order for allocating overhead costs using activity-based costing?

Accepted Answer

A) allocate support activity costs to production activities; determine overhead costs; directly trace and distribute overhead costs to support and production activities; apply production activity costs to products 
B) determine overhead costs; directly trace and distribute overhead costs to support and production activities; apply production activity costs to products; allocate support activity costs to production activities 
C) directly trace and distribute overhead costs to support and production activities; determine overhead costs; allocate support activity costs to production activities; apply production activity costs to products 
D) determine overhead costs; directly trace and distribute overhead costs to support and production activities; allocate support activity costs to production activities; apply production activity costs to products 
A) allocate support activity costs to production activities; determine overhead costs; directly trace and distribute overhead costs to support and production activities; apply production activity costs to products 
B) determine overhead costs; directly trace and distribute overhead costs to support and production activities; apply production activity costs to products; allocate support activity costs to production activities 
C) directly trace and distribute overhead costs to support and production activities; determine overhead costs; allocate support activity costs to production activities; apply production activity costs to products 
D) determine overhead costs; directly trace and distribute overhead costs to support and production activities; allocate support activity costs to production activities; apply production activity costs to products

Question 15

When multiple production department rates are used to apply overhead to products,

Accepted Answer

A) all manufacturing costs are first directly traced to support and production departments and then support department costs are allocated to production departments 
B) only fixed overhead costs are first directly traced to support and production departments and then support department costs are allocated to production departments 
C) all overhead costs are first directly traced to support and production departments and then support department costs are allocated to production departments 
D) support department costs are allocated to production departments and then all overhead costs are directly traced to support and production departments 
A) all manufacturing costs are first directly traced to support and production departments and then support department costs are allocated to production departments 
B) only fixed overhead costs are first directly traced to support and production departments and then support department costs are allocated to production departments 
C) all overhead costs are first directly traced to support and production departments and then support department costs are allocated to production departments 
D) support department costs are allocated to production departments and then all overhead costs are directly traced to support and production departments

Question 16

An example of the split-off point in oil, gasoline, and kerosene production is that point where crude oil is

Accepted Answer

A) drilled 
B) pumped from the ground 
C) transported to the refinery 
D) distilled into gasoline and kerosene 
A) drilled 
B) pumped from the ground 
C) transported to the refinery 
D) distilled into gasoline and kerosene

Question 17

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

Accepted Answer

A) Joint costs are by definition inseparable. 
B) Companies producing joint products rarely allocate joint costs to individual products. 
C) Product costs are more accurate if joint costs are not allocated to individual products. 
D) Joint manufacturing processes are rare. 
A) Joint costs are by definition inseparable. 
B) Companies producing joint products rarely allocate joint costs to individual products. 
C) Product costs are more accurate if joint costs are not allocated to individual products. 
D) Joint manufacturing processes are rare.

Question 18

When a single manufacturing process generates multiple outputs, it is called a(n)

Accepted Answer

A) multiple output manufacturing process 
B) activity-based manufacturing process 
C) joint manufacturing process 
D) joint activity manufacturing process 
A) multiple output manufacturing process 
B) activity-based manufacturing process 
C) joint manufacturing process 
D) joint activity manufacturing process

Question 19

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. The amount of this cost that will be allocated to skimmed milk using the physical units method is

Accepted Answer

A) $1,000 
B) $750 
C) $250 
D) $0 
A) $1,000 
B) $750 
C) $250 
D) $0

Question 20

Under the sequential method of allocating support department costs to production departments using ABC, support department costs are allocated back to support departments from which costs have already been allocated.

Accepted Answer

A) True 
 B)False

Exam 19: Support Department and Joint Cost Allocation

The Maintenance Department that services machines used in the production process is an example of a support department.

Johnson Lumber Mill produces various grades of cut boards from raw lumber. The costs incurred once the cut boards are separated and processed further are

Under the reciprocal services method of allocating support department costs to production departments using ABC, all inter-support-department services are considered in the allocation process.

Jamison Company uses the reciprocal services method to allocate support department costs and has gathered the following information: What is the total Janitorial Department cost using the reciprocal services method?

Which of the following statements is true about the sequential method of allocating support department costs to production departments?

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

In activity-based costing, support department costs are referred to as support activity costs.

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

Which of the following is the correct order for allocating overhead costs using activity-based costing?

When multiple production department rates are used to apply overhead to products,

An example of the split-off point in oil, gasoline, and kerosene production is that point where crude oil is

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

When a single manufacturing process generates multiple outputs, it is called a(n)

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. The amount of this cost that will be allocated to skimmed milk using the physical units method is

Under the sequential method of allocating support department costs to production departments using ABC, support department costs are allocated back to support departments from which costs have already been allocated.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

The Balanced Scorecard and Corporate Social Responsibility

Investments

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