Exam 7: Allocating Costs of Support Departments and Joint Products

Oaks Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $30,000 are allocated on the basis of standard service used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows: MD PD P1 P2 Standard service hours used 100 50 300 150 Number of employees 10 20 90 90 Direst lahour houre 50 50 250 250 -Refer to the figure.Using the direct method,what is the cost of the Personnel Department allocated to Department P1?

Oaks Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $30,000 are allocated on the basis of standard service used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows: MD PD P1 P2 Standard service hours used 100 50 300 150 Number of employees 10 20 90 90 Direst lahour houre 50 50 250 250 -Refer to the figure.What are the total overhead costs associated with P2 after allocating the Maintenance and Personnel departments using the direct method?

Yo Department Store incurred $4,000 of indirect advertising costs for its operations. The following data has been collected for the current year for its three departments: Shoes Cosmetics Crafts Sales \ 160,000 \ 120,000 \ 120,000 Direct advertising costs \ 7,000 \ 10,000 \ 3,000 Newspaper ad space 62\% 20\% 18\% -Refer to the figure.How much of the indirect advertising costs will be allocated to the Shoes Department if newspaper ad space is the activity driver?

Kraft,Inc.has two producing departments.Each producing department is held responsible for a share of the costs of a support department. Actual and budgeted data are as follows: Support department hours used: Department X 12,000 Department Y Total hours Support department costs: Actual support department costs \ 48,000 Budgeted fixed department costs \ 20,000 Budgeted variable rate per hour \ 2.50 Normal support department usage is 8,000 hours each for Department X and Department Y. -Assuming the direct method is used and the purpose is product costing,what are the support department costs allocated to Department X?

A company incurred $120,000 of common fixed costs and $180,000 of common variable costs.These costs are to be allocated to Departments XX and YY.Data on capacity provided and capacity used are as follows: Capacity Pravided Capacity Used Department in Hours in Hours XX 500 400 YY 300 400 Assume that both fixed and variable costs are allocated on the basis of capacity used.What are the fixed and variable costs allocated to Department XX? Fixed Variable A) \ 60,000 \ 90,000 B) \ 60,000 \ 112,500 C) \ 75,000 \ 90,000 D) \ 75,000 \ 112,500

Which of the following would be the most appropriate base for allocating the costs of the maintenance department?

What type of costs are support department costs to the producing departments?

Alpha Company’s travel department had the following budgeted costs for the coming year: Varnable costs \ 34 per trip Fixed costs \ 143,360 The budgeted usage is given below: Yearly Trips Monthly Peak Trip West Sales Territory 110 trips 5 Midwest Sales Territory 170 trips 12 Southern Sales Territory 150 trips 15 Eastern Sales Territory 130 trips 8 The actual usage is given helow West Sales Territory 100 trips Midwest Sales Territory 150 trips Southern Sales Territory 160 trips Eastern Sales Territory 140 trips -Refer to the figure.Fixed costs are allocated on the basis of monthly peak trips.Using both a fixed and variable rate,what are the respective rates for fixed and variable costs per trip for the West Sales Territory?

Savings Bank has three revenue-generating departments: Chequing accounts, Savings Accounts, and Loans. The bank also has three service areas: Administration, Personnel, and Accounting. The direct costs per month and the interdepartmental service structure are shown below: $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Percentage of Service Used by }$ Dept. Costs Admin. Pers. Acctg. Cheq. Sav. Loans Administration \ 40,000 - 10 10 40 20 20 Personnel 23,000 10 - 10 20 40 20 Accounting 30,000 10 10 - 20 20 40 Chequing 41,000 Savings 25,000 Loans 16,000 -Refer to the figure.How much cost would be allocated to the Savings Account area from Administration using the direct method?

A sawmill processes logs into four grades of lumber totalling 500,000 board metres as follows at a joint cost of $300,000: Grade Board Metres Final Sales Value First and second 75,000 \ 56,250 No. 1 common 200,000 180,000 No. 2 common 100,000 105,000 No. 3 common 125,000 127.500 - What is the gross profit of No.3 common if the constant gross margin percentage method is used?

A sawmill processes logs into four grades of lumber totalling 500,000 board metres as follows at a joint cost of $300,000: Grade Board Metres Final Sales Value First and second 75,000 \ 56,250 No. 1 common 200,000 180,000 No. 2 common 100,000 105,000 No. 3 common 125,000 127.500 -What amount of joint costs will be allocated to No.2 common using the constant gross margin percentage method?

According to the rules of financial reporting (GAAP),which costs are assigned to products?

Newton Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $120,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $18,000 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $36,000 and $60,000, respectively. Data on standard service hours and number of employees are as follows: Maint. Person. Dept. Dept. Dept. Dept. P1 p2 Standard service hours used 400 200 1,200 600 Number of emplayes 20 40 180 180 Direct labour hours 200 200 1,000 1,000 -Refer to the figure.What are the total overhead costs associated with P2 after allocating the Maintenance and Personnel Departments using the direct method?

Maddux Company manufactures products X,Y,and Z in a joint process.The following information is available: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { Praducts }$ Tatal Urits praduced 12,000 ? ? 24,000 Sales value at split-aff ? ? \ 50,000 \ 200,000 Jaint costs \ 48,000 ? ? \ 120,000 Sales value if pracessed further 110,000 \ 90,000 \ 60,000 \ 260,000 Adrlitional cost if pracessed further \ 18,000 \ 14,000 \ 10,000 \ 42,000 Joint product costs are allocated using the sales value at split-off approach. a.What is the sales-value-at-split-off for Product X? b.What is the amount of joint costs allocated to Product Y using the sales-value-at-split-off method? c.If the company used the physical units method to allocate joint cost,how much joint cost would be allocated to Product X?

Which of the following departments is a service department?

Foster Company incurred $200,000 to manufacture the following products in a joint process: Product Units Produced Weight per Unit Selling Price per Unit 500 8 \ 5 1,000 6 10 1,500 4 10 2,000 2 5 -How much joint cost would be allocated to Product I based on the physical units method?

Nelson Inc.obtains two products and a by-product from its production process.By-product revenues are treated as other income and a noncost approach is used to assign costs to them.During the period,1,200 units were processed at a cost of $12,000 for materials and conversion costs,resulting in the following: Sales Value Costs after Final Praduct Units Separation Separation Value 200 \ 4,000 \ 2,000 \ 10,000 400 5,000 6,000 12,000 By-praduct 150 500 500 1,500 a.Account for all costs using a physical basis for allocation. b.Account for all costs using net realizable value as the basis for allocation. c.Account for all costs using final sales value as the basis for allocation. d.How much joint costs should be allocated to the by-product?

Which of the following is a major objective of allocation?

Foster Company incurred $200,000 to manufacture the following products in a joint process: Praduct Units Praduced Weieht per Unit Selling Price per Unit I 500 8 \ 5 J 1,000 6 10 K 1,500 4 10 L 2,000 2 5 - How much joint cost would be allocated to Product K based on the total sales value method?

Which of the following departments is a producing department?