Exam 7: Cost Allocation: Departments, Joint Products, and By-Products

The total cost accumulated in the fabrication department using the step method is (assume the purchasing department goes first; calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

The total cost accumulated in the assembly department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

The departmental cost allocation approach is preferred when the firm has:

Firm X has a production process that has a total joint cost of $15,000. At the split-off point, there are 2,000 pounds of Product 1 and 3,000 pounds of Product 2. What is the cost per pound of Product 1 using the physical measure method?

Which of the following is not an ethical issue managers encounter with cost allocation?

The amount of joint costs allocated to product X using the sales value at split-off method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

The amount of joint costs allocated to product Z using the sales value at split-off method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

A key ethical issue in cost allocation involves costing in an international context, because the choice of a cost allocation method can affect:

The Chapman Manufacturing Company has two service departments - manufacturing support and facilities management, and two production departments - assembly and packing/shipping. The distribution of each service department's efforts to the other departments is shown below: The direct operating costs of the departments (including both variable and fixed costs) were as follows: Required: (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar): (1) Allocate the service department costs to the production departments using the direct method. (2) Allocate the service department costs to the production departments using the step method with the support department going first. (3) Allocate the service department costs to the production departments using the reciprocal method.

The total cost accumulated in the fabrication department using the direct method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Which one of the following methods uses units of output to allocate joint costs to joint products?

The amount of joint costs allocated to product Z using the physical measure method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

The amount of joint costs allocated to product M using the physical measure method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Net Realizable Value (NRV) of a product is:

The most effective basis for cost allocation exists when which one of the following can be determined?

The cost allocation method most widely used because of its accuracy and ability to provide a detailed level of analysis is:

The concepts of cost allocation that are used in manufacturing can also apply in:

The direct method of departmental cost allocation is the simplest of the three methods because it:

Lond Company produces joint products Jana and Reta, and by-product Bynd. Jana is sold at split-off; Reta and Bynd undergo additional processing. Production data pertaining to these products for the year ended December 31, 2013 were as follows: Lond had no beginning or ending inventories and no materials were spoiled in production. Bynd's net realizable value is deducted from joint costs. Joint costs are allocated to joint products to achieve the same gross margin percentage for each joint product. Required: Prepare the following information for Lond Company for the year ended December 31, 2013: 1. Total gross margin. 2. Allocation of joint costs to Jana and Reta. 3. Separate gross margins for Jana and Reta.

The objectives of cost allocation are to: