Exam 12: Cost Allocation

Hawn Company manufactures two models of pens,a standard model and a deluxe model.Three activities have been identified in the production of the pens.The following information is available: If activity-based costing is used,the setup cost assigned to the standard model is ________.

Bears Company has three divisions and allocates central corporate costs of $17,500 to each division based on two different cost drivers that include revenue and cost of goods sold. Required: A)Allocate the central corporate costs to each division using revenue as the cost driver. B)Allocate the central corporate costs to each division using cost of goods sold as the cost driver.

Haha Company manufactures two models of pens,a standard model and a deluxe model.Three activities have been identified in the production of the pens.The following information is available: If activity-based costing is used,the total costs assigned to the standard model are ________.

When allocating fixed costs from service departments to production departments,managers should use ________ instead of ________.

Bunny Company manufactures three products from a joint process.Joint costs for the year amounted to $250,000.The following data was available: Assume the relative-sales-value method of allocating joint costs is used.What amount of joint costs is allocated to Product Z?

Typical cost drivers in a traditional approach to costing products are direct labor hours and machine hours.

Joint costs are allocated to main products but not to by-products.

Assume the cost object is customers.It is important to directly trace or allocate costs associated with customer actions to ________ instead of ________.

Two conventional ways of allocating joint costs to jointly-produced products are physical units and relative sales value.

Garcia Company has two service departments,Maintenance and Personnel.Garcia Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year: Assume the step-down method is used to allocate service department costs and the Personnel Department is allocated first.Then the amount of cost allocated from the Maintenance Department to the Personnel Department is ________.

Examples of central corporate support costs do NOT include ________.

Valdez Company has two service departments,Maintenance and Personnel.Valdez Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year: Assume the step-down method is used to allocate service department costs and the Maintenance Department is allocated first.What amount of costs would be allocated from the Maintenance Department to the Personnel Department?

If the vast majority of costs were directly traceable to cost objects,then cost allocation would be a minor issue.

A by-product ________.

Garfield Company processes copper ore into two products,C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Garfield Company plans to produce 40,000 pounds of Product C and 20,000 pounds of Product U from 60,000 pounds of ore.Product C sells for $30 per pound and Product U sells for $40 per pound.Assume the company uses the physical-units method of allocating joint costs.What amount of joint costs is allocated to Product C?

If we account for a product as a by-product,we allocate ________ costs to it.

The direct method of cost allocation is generally preferred because it recognizes the effect of support provided by service departments to other service departments.

Variable costs of service departments are allocated to user departments using ________ cost rates instead of ________ cost rates.

Allocation of costs to cost objects may be described as apportion or attribute.

Johnson Company has two production departments called Mixing and Finishing.The maintenance department serves both production departments.Budgeted fixed costs for the maintenance department are $40,000.Budgeted variable costs for the maintenance department are $4.00 per labor hour.Other relevant data follow: Actual maintenance department costs: The amount of fixed maintenance department costs allocated to the Finishing Department should be ________.