Exam 7: Allocating Costs of Support Departments and Joint Products

What is the definition of split-off point?

Describe the differences between support and producing departments.Give three examples of each.

The following information pertains to Yoder Corporation: Yoder Corporation does not divide costs into fixed and variable components.Personnel costs are allocated based on the number of employees,and maintenance costs are allocated based on machine hours. Predetermined overhead rates for fabrication and assembly are based on direct labour hours. If the direct method is used to allocate support department costs,what is the predetermined overhead rate for the Fabrication Department (rounded to two decimal places)?

Deli Products produces two products,X and Y,in a single process.In the current year,the joint costs of this process were $25,000.In addition,4,000 units of X and 6,000 units of Y were produced.Separable processing costs beyond the split-off point were X - $10,000; Y - $20,000.X sells for $10.00 per unit; Y sells for $7.50 per unit. -What amount of joint costs will be allocated to Product X using the physical units method?

Which of the following departments is a producing department?

Wilson, Inc., operates a copy business at two different locations. Wilson, Inc., has one support department that is responsible for cleaning, service, and maintenance of its copying equipment. The costs of the support department are allocated to each copy centre on the basis of total copies made. During the first month, the costs of the support department were expected to be $400,000. Of this amount, $120,000 is considered a fixed cost. During the month, the support department incurred actual variable costs of $256,000 and actual fixed costs of $144,000. Normal and actual activity (copies made) are as follows: Copy Centre 1 Copy Centre 2 Normal activity (copies) 1,200,000 800,000 Actual activity (copies) 1,000,000 880,000 -Refer to the figure.For purposes of performance evaluation,what are the fixed costs allocated to Copy Centre 1?

What would be a possible causal factor to use when allocating cafeteria costs?

If the allocation is for product costing,how would the allocation of variable support department costs be calculated?

How are support department costs accounted for?

Iles Corporation produces four products in a joint process for $500,000.The following information is available on total sales and production in units: Products sales Production I 1,000 2,000 L 2,000 2,500 E 3,000 3,500 S 4,000 4,000 What amount of joint costs will be allocated to I based on the physical units method?

Rust Company has two support departments (S1 and S2) and two producing departments (X and Y). Department S1 serves departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%. Department S2 serves departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%. Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively. -Refer to the figure.What are the total costs to be allocated from Department S1?

The support departments typically found in manufacturing and nonmanufacturing organizations are as follows: • Cafeteria • Personnel • Maintenance • Purchasing • Accounting For each of the preceding support departments,indicate potential bases that could be used to allocate costs to the producing departments.

Lopez Manufacturing prices its products at full cost plus 40 percent.The company operates two support departments and two producing departments.Budgeted costs and normal activity levels are as follows: Support Department A's costs are allocated based on square metres,and Support Department B's costs are allocated based on number of employees.Department C uses direct labour hours to assign overhead costs to products,while Department D uses machine hours. One of the products the company produces requires 4 direct labour hours per unit in Department C and no time in Department D.Direct materials for the product cost $45 per unit,and direct labour is $20 per unit. If the sequential method of allocation is used and the company follows its usual pricing policy,what would be the selling price of the product (with allocations rounded to the nearest whole dollar and the costs per unit rounded to two decimal places)?

Fox Company has two support departments (S1 and S2)and two producing departments (P1 and P2).Estimated direct costs and percentages of services used by these departments are as follows: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Used by Department }$ Support Dept. S1 - 10\% 40\% 50\% S2 20\% - 50\% 30\% Direct costs \ 4.500 \ 8.000 \ 10.000 \ 15.00 a.Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. b.Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method.

What is the term for a secondary product recovered in the course of manufacturing a primary product during a joint process?

If the allocation is for performance evaluation,how would the allocation of variable support department costs be calculated?

Which of the following methods allocates joint production costs based on the kilograms of product produced?

Rust Company has two support departments (S1 and S2) and two producing departments (X and Y). Department S1 serves departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%. Department S2 serves departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%. Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively. -Refer to the figure.What is S1's cost equation?

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 sequential method,if the support department with the highest percentage of interdepartmental service is allocated first,what is the cost of the Maintenance Department allocated to Department P1?

Jacob Company has two support 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 $18,000 and $30,000,respectively. Data on standard service hours and number of employees are as follows: Maint. Person. Dept. Dept. Dept. Dept. Standard service hours used 100 50 300 150 Number of employees 5 10 45 45 Direct lahour houre 50 5n 250 250 Predetermined overhead rates for departments X and Y,respectively,are based on direct labour hours. - What is the overhead rate for department X assuming the direct method is used?