Exam 7: Additional Topics in Product Costing

Glenwood Company applies factory overhead in its two producing departments using a predetermined rate based on budgeted machine hours in the Mixing Department and based on budgeted labor-hours in the Packaging Department. Variable cafeteria costs are allocated to the producing departments based on budgeted number of employees, and fixed costs are allocated based on the capacity number of employees. Variable maintenance costs are allocated on the budgeted number of direct labor-hours, and fixed costs are allocated on direct labor hour capacity. The data concerning next year's operations are as follows: Required: a. Prepare a schedule showing a direct allocation of budgeted service department costs to producing departments. b. Determine the predetermined overhead rate for the producing departments.

Inventory storage costs are reduced in just-in-time (JIT) inventory management.

Realty Company allocates common Building Department costs to producing departments (A and and B) based on space occupied, and it allocates common Personnel Department costs based on the number of employees. Space occupancy and employee data are as follows: If Realty Company uses the direct allocation method, the ratio representing the portion of Personnel costs allocated to Department A is:

The Woodridge Manufacturing Company has two Production Departments: Cutting and Pasting. Each of these two departments uses the services provided by the Computing and Maintenance Departments, which both support the production functions and each other's functions as well. Woodridge uses the step method of allocating these service department costs to the production departments. Computing is allocated on the basis of hours of department operations and Maintenance is allocated on the basis of departmental direct labor hours. Last period the following costs were recorded: Production Department data: Required: a. Determine the amount of Maintenance costs allocated to the Cutting and Pasting Departments using the step method of allocating service department costs. b. Determine the amount of Computing costs allocated to the Cutting and Pasting Departments using the step method of allocating service department costs. c. Determine the total overhead costs of the Cutting and Pasting Departments when this method of allocating service department costs is used.

The linear algebra method of allocating service department costs does not recognize any interdepartmental services?

The step method of allocating service department costs gives only partial recognition to interdepartmental services.

A goal of performance reporting in a lean accounting system is:

Just-in-time is an approach toward managing:

Rapport Manufacturing Company has two service departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $60,000 are allocated on the basis of standard service used. The Personnel Department costs of $9,000 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $72,000 and $120,000, respectively. Data on standard service-hours and number of employees are as follows: Calculate the total overhead costs associated with Department Y after allocating the Maintenance and Personnel Departments using the direct method.

The total time required to produce a unit or batch is known as:

The Helix Manufacturing Company has two Production Departments: Mixing and Molding. Each of these two departments uses the services provided by the Utilities and Human Resources Departments, which both support the production functions and each other's functions as well. Helix uses the direct method of allocating these service department costs to the production departments. Utilities are allocated on the basis of hours of department operations and Human Resources is allocated on the basis of departmental direct labor hours. Last period the following costs were recorded: Production Department data: Required: a. Determine the amount of Utilities costs allocated to the Mixing and Molding Departments using the direct method of allocating service department costs. b. Determine the amount of Human Resource costs allocated to the Mixing and Molding Departments using the direct method of allocating service department costs. c. Determine the total overhead costs of the Mixing and Molding Departments if the direct method of allocating department costs is used.

Eastern Springs Company uses two producing departments (A and B) and two service departments (S1 and S2). The costs incurred in S1 and S2 are allocated to Departments A and B and included in their factory overhead rates for costing products. S1 costs are allocated based on the number of employees, S2 costs are allocated based on direct labor-hours, and the production departmental overhead rates are also based on direct labor hours. The following data are available for a recent period: Required: a. Prepare a schedule allocating the service department costs to the producing departments using the step allocation method. The department providing the greatest percentage of interdepartmental services to other service departments should be allocated first. b. Determine the overhead rates per direct labor hour for Departments A and B.

Service departments within the context of management accounting typically provide services, such as repairs to products under warranty, directly to customers.

Lowering cycle times reduces the need for:

Jacklyn Company has three service departments whose direct department costs are $20,000, $40,000, and $60,000, respectively, and two producing departments whose direct department costs are $400,000 and $600,000, respectively. Calculate the combined total department costs for the producing departments after allocation of the service departments.

Explain the concept of just-in-time inventory management and its relationship to the lean production concept.

The use of flexible manufacturing systems, properly sequencing jobs, and properly placing tools will minimize: