Exam 7: Allocating Costs of Support Departments and Joint Products

Plants Company has two support departments (S1 and S2)and two producing departments (P1 and P2).Department S1 costs are allocated on the basis of number of employees,and Department S2 costs are allocated on the basis of space occupied expressed in square metres. Data on direct department costs,number of employees,and space occupied are as follows: S1 S2 P1 P2 Direct dept. costs \ 7,500 \ 11,000 \ 27,500 \ 30,000 Number of employees 10 5 20 25 Space occupied (sq. metres) 1,000 500 1,500 2,500 If Plants uses the direct method,what would be the ratio representing the portion of Department S2 allocated to P1?

Ito Auto Company incurred $5,000 of indirect advertising costs for its operations.The following data have been collected for the current year for its three departments: Sales \ 50,000 \ 35,000 \ 15,000 Direct advertising costs \ 2,500 \ 2,000 \ 500 Newspaper ad space 60\% 35\% 5\% Determine the costs assigned to each department using the following activity drivers: a.Sales b.Direct advertising costs c.Newspaper ad space

Consider the following statement: Joint cost is prorated to the products on the basis of each product's share of units.Which joint cost allocation method does the statement describe?

Which of the following is a by-product?

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 performance evaluation,what are support department costs allocated to Department X?

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 net realizable value method?

What is the term for activities or variables within a producing department that provoke the incurrence of support costs?

Dean Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $90,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $13,500 are allocated on the basis of number of employees. The direct costs of departments X and Y are $27,000 and $45,000, respectively. Data on standard service hours and number of employees are as follows: Maint. Person. Dept. Dept Standard service hours used 200 150 1,200 600 Number of employees 25 50 75 75 Direct labour hours 250 250 1.000 500 Predetermined overhead rates for departments X and Y,respectively,are based on direct labour hours. -Refer to the figure.What is the overhead rate for Department Y assuming the direct method is used?

Which of the following would NOT be a criterion used to rank departments to determine the order of allocation under the sequential method?

The Zink Company assigns plant administration costs to the production departments based on the number of employees.Which of the following would be a good combination of common costs with an activity driver?

If a support department's costs were budgeted to be $150,000 and actual costs incurred by the support department were $200,000,what should be the total amount of the support department's costs allocated to other departments?

Horn Bank has two bank locations: Main and Rural.The central office provides cheque-processing services for the two banks.Information pertaining to the banks is as follows: Cheque Processing Main Rural Budgeted fixed costs \ 100,000 -- -- Budgeted variable rate per hour \ 20 -- -- Normal usage in hours -- 600 400 Actual fixed costs \ 107,500 -- -- Actual variable costs \ 17,500 -- -- Actual usage in hours -- 550 250 a.Use the direct method to allocate the cheque-processing centre costs to each bank to provide information for setting service charges. b.Use the direct method to allocate the computer centre costs to each bank for performance evaluation purposes. c.Determine the costs of the cheque-processing centre NOT allocated to the two banks.Why were these costs not allocated to the operating units?

What would be the result if the costs of support departments were allocated to producing departments?

What joint cost allocation method would assign the same amount of cost per unit to two joint products that sell for $10 and $40,respectively?

The sales-value-at-split-off method allocates joint production costs based on each product's share of which of the following?

Compare and contrast the various methods of accounting for joint product costs.

Xi Print operates a copy business at two different locations. Xi Print 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 $200,000. Of this amount, $60,000 is considered a fixed cost. During the month, the support department incurred actual variable costs of $128,000 and actual fixed costs of $72,000. Normal and actual activity (copies made) are as follows: Copy Centre 1 Copy Centre 2 Normal activity (copies) 600,000 400,000 Actual activity (copies) 500,000 440,000 -Refer to the figure.For purposes of performance evaluation,what are the fixed costs allocated to Copy Centre 2?