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

Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Marin's production, sales, and costs follows.The amount of joint costs allocated to product DBB-2 using the physical measure method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

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: Manufacturing Support \ 240,000 Facilities Management 450,000 Assembly 1,200,000 Pack/Ship 225,000 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.

Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Marin's production, sales, and costs follows.The amount of joint costs allocated to product DBB-1 using the physical measure method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

The following data on overhead apply to the Acme Manufacturing Company that manufactures frames for large trucks in three production departments (J-122, J-123, and J-125).There are two service departments, the Human Resources Department and the Facilities Department. *Allocated on the basis of hours of usage in the HR department. **Allocated on the basis of floor space. Required: Using hours as the application base for the Human Resources Department and square feet of floor space for the Facilities Department, apply overhead from these service departments to the production departments, using the following two methods.Calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar. (1) Direct method. (2) Step method (assume the human resources department is allocated first).

Harmon Inc. produces joint products L, M, and N from a joint process. Information concerning a batch produced in May at a joint cost of $75,000 was as follows:The amount of joint costs allocated to product L 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):

Barstow Manufacturing Company has two service departments — product design and engineering support, and two production departments — assembly and finishing. The distribution of each service department's efforts to the other departments is shown below:The total cost accumulated in the finishing 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):

Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Marin's production, sales, and costs follows.The amount of joint costs allocated to product DBB-1 using the physical measure method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Marin's production, sales, and costs follows.The amount of joint costs allocated to product DBB-1 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

The point in a joint production process at which individual products can be identified for the first time is called the:

Revenue methods of by-product cost allocation are justified on financial accounting concepts of:

Barstow Manufacturing Company has two service departments — product design and engineering support, and two production departments — assembly and finishing. The distribution of each service department's efforts to the other departments is shown below:The total cost accumulated in the assembly 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):

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

The reciprocal method of departmental cost allocation is preferred over the step method because it takes into account all the reciprocal flows between:

A concept which is commonly employed with allocation bases related to size is:

Garrison Co. produces three products — X, Y, and Z — from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $120,000. Sales values and costs needed to evaluate Garrison's production policy follow. The amount of joint costs allocated to product X 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 Merchant Manufacturing Company has two service departments — purchasing and maintenance, and two production departments — fabrication and assembly. The distribution of each service department's efforts to the other departments is shown below: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 Long Term Care Plus Company has two service departments — actuarial and premium rating, and two operations departments — marketing and sales. The distribution of each service department's efforts to the other departments is shown below: The total cost accumulated in the marketing department using the direct method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, 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 concepts of cost allocation that are used in manufacturing can also apply in:

Relative sales value at split-off is used to allocate: Cost Beyond