Exam 19: Support Department and Joint Cost Allocation

In the process of applying overhead using multiple production department rates, overhead costs are directly traced to support and production departments and are then allocated to production departments based on the amount of support activity used by each department.

Managers at Valvco, Inc., will need to undertake an analysis and interpretation of product costs that include joint costs with great care and understanding.

Under the reciprocal method of allocating support department costs to production departments using ABC, any inter-support-department usages are ignored.

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 Janitorial Department by the Cutting Department is

The goal of using any overhead rate is to apply all production costs to the product.

Which of the following statements explains the major difference between the sequential method and the direct method?

The direct method of allocating support department costs to production using the ABC method is the easiest and most accurate.

The following is a list of various departments in a diesel engine manufacturing/rebuilding facility. The company makes diesel engines for the locomotive industry. It also remanufactures its own previously built engines that need to be overhauled after several years of use. Classify each department below as either a support department or a production department.a.Support b.Production -Cost Accounting Department-collects costs of raw materials, labor, and overhead to be applied to engines

Which of the following methods allocates joint costs based on measures estimated after the final products are fully processed and are ready to be sold?

Departmental information for the four departments at Samoa Industries is provided below.​ The Janitorial and Cafeteria departments are support departments. Samoa uses the sequential method to allocate support department costs, first allocating the costs from the Janitorial Department to the Cafeteria, Cutting, and Assembly departments. 1. Determine the dollar amount of the Janitorial Department costs to be allocated to the (a) Cafeteria, (b) Cutting, and (c) Assembly departments. 2. Determine the dollar amount of the Cafeteria Department costs to be allocated to the (a) Cutting and (b) Assembly departments.

Match each description below to the appropriate term (a-c). -Transferring costs among departments A)Allocate B)Distribute C)Apply

A key difference between using multiple production department rates and activity-based costing is

Departmental information for the four departments at Samoa Industries is provided below.​ The Janitorial and Cafeteria departments are support departments. Determine the proportional (percentage) usage of the Janitorial Department by the (a) Cutting and (b) Assembly departments using the direct method.

When multiple manufacturing processes generate a single output, it is called a joint manufacturing process.

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, (b) the total Cafeteria (C) costs, and (c) the rewritten equation substituting C into J?

The outputs generated from a joint manufacturing process are called joint costs.

Falco Industries may want to use the net realizable value method of allocating joint costs because it manufactures many products that are processed further after the split-off point and will be sold for a much higher price after the additional processing.

The outputs generated from the joint manufacturing process are called joint products.

The following is a list of the steps taken when using ABC to apply overhead to products. Put them in the proper order by item letter.

Because support department costs are directly related to production, they are applied to product costs as a part of direct labor.