Answer the following questions using the information below: The Speedjet Aircraft Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department. The following data apply to the coming budget year: Budgeted costs of operating the materials laboratory for 100,000 to 200,000 technician hours per year: $\begin{array}{lll} \text { Fixed costs per year }&\$8,000,000\\ \text { Variable costs }&\$ 70 \text { per technician hour }\\ \text { Budgeted long-run usage in hours per year: }\\ \text { Large Plane Department } & 80,000 \text { technician hours } \\ \text { Small Plane Department } & 70,000 \text { technician hours } \end{array}$ Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Large Plane Department was 70,000 technician hours and by the Small Plane Department was 65,000 technician hours. -If a dual-rate cost-allocation method is used,what amount of materials laboratory costs will be allocated to the Small Plane Department? Assume budgeted usage is used to allocate materials laboratory costs and actual usage is used to allocate variable materials laboratory costs.

A) $8,225,000 B) $8,050,000 C) $8,483,333 D) $8,783,333 A) $8,225,000 B) $8,050,000 C) $8,483,333 D) $8,783,333

Answer the following questions using the information below: Electro Corp sells a refrigerator and a freezer as a single package for $1,000. Other data are in the chart below. \[\begin{array} { | l | c | c | c | } \hline & \text { Refrigerator } & \text { Full-size Freezer } & \text { Packaged Price } \\ \hline \text { Selling price } & \$ 800 & \$ 400 & \$ 1,000 \\ \hline \text { Manufactuing cost per unit } & \$ 600 & \$ 200 & \\ \hline \text { Stand-alone product revenues } & \$ 1,200,000 & \$ 800,000 & \\ \hline \end{array}\] -Using the stand-alone method with selling price as the weight for revenue allocation,what amount will be allocated to the refrigerator?

A) $500.00 B) $333.33 C) $666.67 D) $676.67 A) $500.00 B) $333.33 C) $666.67 D) $676.67

Answer the following questions using the information below: Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: $\begin{array}{|l|c|c|c|c|}\hline&\text { Support Departments }&&\text { Production }\\ &&&\text { Departments }\\ \hline& \begin{array}{c} \text { Maintenance } \\ \text { Department } \end{array} & \begin{array}{c} \text { Personnel } \\ \text { Department } \end{array} & \text { A } & \text { B } \\ \hline\text { Budgeted costs } & \$ 300,000 & \$ 100,000 & \$ 160,000 & \$ 240,000 \\ \hline \text { hudgeted maintenance- } & \text { NA } & 800 & 1,200 & 600 \\\text { hours }\\ \hline \text { Number of employees } & 50 & \text { NA } & 200 & 600\\\hline \end{array}$ -Using the direct method,what amount of Personnel Department costs will be allocated to Department A?

A) $25,000 B) $28,000 C) $30,000 D) $20,000 A) $25,000 B) $28,000 C) $30,000 D) $20,000

Answer the following questions using the information below: Illumination Corp operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year: Budgeted costs of operating the plant for 2,000 to 3,000 hours: $\begin{array}{lr} \text { Fixed operating costs per year } & \$ 500,000 \\ \text { Variable operating costs } & \$ 800 \text { per hour } \\ \text { Budgeted long-run usage per year: } & 2,000 \text { hours } \\ \text { Flashlight Division } & 1000 \text { hours } \\ \text { Night Light Division } & 4,000 \text { hours } \end{array}$ Assume that practical capacity is used to calculate the allocation rates. Actual usage for the year by the Flashlight Division was 1,500 hours and by the Night Light Division was 800 hours. -If a dual-rate cost-allocation method is used,what amount of operating costs will be budgeted for the Night Light Division?

A) $890,000 B) $900,000 C) $925,000 D) $835,000 A) $890,000 B) $900,000 C) $925,000 D) $835,000

Answer the following questions using the information below: Buzz's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information pertaining to three bundled products and the stand-alone prices is as follows: \[\begin{array} { | l | c | c | l | c | } \hline & \begin{array} { c } \text { Stand-Alone } \\ \text { Selling Price } \end{array} & { \text { Cost } } &{ \text { Package } } & \begin{array} { c } \text { Packaged } \\ \text { Price } \end{array} \\ \hline \text { Reading Fun } & \$ 25 & \$ 3.60 & \text { 1. Reading Fun \& Math Fun } & \$ 44 \\ \hline \text { Math Fun } & \$ 30 & \$ 4.00 & \text { 2. Reading Fun \& Analysis } & \$ 56 \\ \hline \text { Analysis } & \$ 45 & \$ 5.00 & \text { 3. All three } & \$ 76 \\ \hline \end{array}\] -Using the stand-alone method with selling price as the weight for revenue allocation,what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)?

A) $20 B) $22 C) $19 D) $25 A) $20 B) $22 C) $19 D) $25

Answer the following questions using the information below: The Speedjet Aircraft Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department. The following data apply to the coming budget year: Budgeted costs of operating the materials laboratory for 100,000 to 200,000 technician hours per year: $\begin{array}{lll} \text { Fixed costs per year }&\$8,000,000\\ \text { Variable costs }&\$ 70 \text { per technician hour }\\ \text { Budgeted long-run usage in hours per year: }\\ \text { Large Plane Department } & 80,000 \text { technician hours } \\ \text { Small Plane Department } & 70,000 \text { technician hours } \end{array}$ Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Large Plane Department was 70,000 technician hours and by the Small Plane Department was 65,000 technician hours. -If a single-rate cost-allocation method is used,what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume actual usage is used to allocate copying costs.

A) $8,166,666.67 B) $8,766,666.67 C) $8,433,333.33 D) $8,633,333.33 A) $8,166,666.67 B) $8,766,666.67 C) $8,433,333.33 D) $8,633,333.33

Answer the following questions using the information below: Electro Corp sells a refrigerator and a freezer as a single package for $1,000. Other data are in the chart below. \[\begin{array} { | l | c | c | c | } \hline & \text { Refrigerator } & \text { Full-size Freezer } & \text { Packaged Price } \\ \hline \text { Selling price } & \$ 800 & \$ 400 & \$ 1,000 \\ \hline \text { Manufactuing cost per unit } & \$ 600 & \$ 200 & \\ \hline \text { Stand-alone product revenues } & \$ 1,200,000 & \$ 800,000 & \\ \hline \end{array}\] -Using the stand-alone method with stand-alone product revenues as the weight for revenue allocation,what amount will be allocated to the refrigerator?

A) $628.50 B) $600.00 C) $627.00 D) $625.00 A) $628.50 B) $600.00 C) $627.00 D) $625.00

Exam 15: Allocation of Support-Department Costs, common Costs, and Revenues

In costs-plus-fixed-fee contracts the allocation of a specific cost may be difficult to defend on the basis of any cause-and-effect reasoning.

(True/False)

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Question 101

Answer the following questions using the information below: The Speedjet Aircraft Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department. The following data apply to the coming budget year: Budgeted costs of operating the materials laboratory for 100,000 to 200,000 technician hours per year: Fixed costs per year \8 ,000,000 Variable costs \ 70 per technician hour Budgeted long-run usage in hours per year: Large Plane Department 80,000 technician hours Small Plane Department 70,000 technician hours Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Large Plane Department was 70,000 technician hours and by the Small Plane Department was 65,000 technician hours. -If a dual-rate cost-allocation method is used,what amount of materials laboratory costs will be allocated to the Small Plane Department? Assume budgeted usage is used to allocate materials laboratory costs and actual usage is used to allocate variable materials laboratory costs.

(Multiple Choice)

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Question 102

Allocating common costs can best be achieved by using the stand-alone cost-allocation method.

(True/False)

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Question 103

Give examples of bundled products for each of the following industries: a.Resort hotel b.Bank c.Restaurant d.Computer store e.Super markets f.Personal care products manufacturer

(Essay)

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Question 104

Answer the following questions using the information below: Electro Corp sells a refrigerator and a freezer as a single package for $1,000. Other data are in the chart below. Refrigerator Full-size Freezer Packaged Price Selling price \ 800 \ 400 \ 1,000 Manufactuing cost per unit \ 600 \ 200 Stand-alone product revenues \ 1,200,000 \ 800,000 -Using the stand-alone method with selling price as the weight for revenue allocation,what amount will be allocated to the refrigerator?

(Multiple Choice)

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Question 105

Answer the following questions using the information below: Emrald Corp currently uses a manufacturing facility costing $500,000 per year; 90% of the facility's capacity is currently being used. A start-up business has proposed a plan that would utilize the other 10% of the facility and increase the overall costs of maintaining the space by 5%. -If the stand-alone method were used,what amount of cost would be allocated to the start-up business?

(Multiple Choice)

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Question 106

Which of the following is a disadvantage of single-rate method?

(Multiple Choice)

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Question 107

The direct allocation method does not allocate support department costs to other support departments.

(True/False)

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Question 108

The selling prices method under stand-alone revenue-allocation method is best because the weights explicitly consider the prices customers are willing to pay for the individual products

(True/False)

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Question 109

Under the stand-alone method of allocating common costs ________.

(Multiple Choice)

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Question 110

When using the dual-rate method,the fixed cost allocation is based on ________.

(Multiple Choice)

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Question 111

The stand-alone method uses the product in the bundle with the most sale and then uses this ranking to allocate bundled revenues to individual products.

(True/False)

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Question 112

Answer the following questions using the information below: Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance Department Personnel Department A B Budgeted costs \ 300,000 \ 100,000 \ 160,000 \ 240,000 hudgeted maintenance- NA 800 1,200 600 hours Number of employees 50 NA 200 600 -Using the direct method,what amount of Personnel Department costs will be allocated to Department A?

(Multiple Choice)

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Question 113

Answer the following questions using the information below: Illumination Corp operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year: Budgeted costs of operating the plant for 2,000 to 3,000 hours: Fixed operating costs per year \ 500,000 Variable operating costs \ 800 per hour Budgeted long-run usage per year: 2,000 hours Flashlight Division 1000 hours Night Light Division 4,000 hours Assume that practical capacity is used to calculate the allocation rates. Actual usage for the year by the Flashlight Division was 1,500 hours and by the Night Light Division was 800 hours. -If a dual-rate cost-allocation method is used,what amount of operating costs will be budgeted for the Night Light Division?

(Multiple Choice)

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Question 114

Answer the following questions using the information below: Buzz's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information pertaining to three bundled products and the stand-alone prices is as follows: Stand-Alone Selling Price Cost Package Packaged Price Reading Fun \ 25 \ 3.60 1. Reading Fun \& Math Fun \ 44 Math Fun \ 30 \ 4.00 2. Reading Fun \& Analysis \ 56 Analysis \ 45 \ 5.00 3. All three \ 76 -Using the stand-alone method with selling price as the weight for revenue allocation,what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)?

(Multiple Choice)

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Question 115

Revenue allocation based on the number of physical units is only appropriate when individual products in the bundle are of equal value.

(True/False)

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Question 116

An advantage of the single-rate method is that it is the most accurate method of cost-allocation.

(True/False)

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Question 117

Answer the following questions using the information below: The Speedjet Aircraft Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department. The following data apply to the coming budget year: Budgeted costs of operating the materials laboratory for 100,000 to 200,000 technician hours per year: Fixed costs per year \8 ,000,000 Variable costs \ 70 per technician hour Budgeted long-run usage in hours per year: Large Plane Department 80,000 technician hours Small Plane Department 70,000 technician hours Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Large Plane Department was 70,000 technician hours and by the Small Plane Department was 65,000 technician hours. -If a single-rate cost-allocation method is used,what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume actual usage is used to allocate copying costs.

(Multiple Choice)

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Question 118

Craylon Corp sells two products X and Y.X sells for $200 and Y sells for $150.Both X and Y sell for $300 as a bundle.What is the revenue allocated to product Y,if product X is termed as the primary product in the bundle?

(Multiple Choice)

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Question 119

Answer the following questions using the information below: Electro Corp sells a refrigerator and a freezer as a single package for $1,000. Other data are in the chart below. Refrigerator Full-size Freezer Packaged Price Selling price \ 800 \ 400 \ 1,000 Manufactuing cost per unit \ 600 \ 200 Stand-alone product revenues \ 1,200,000 \ 800,000 -Using the stand-alone method with stand-alone product revenues as the weight for revenue allocation,what amount will be allocated to the refrigerator?

(Multiple Choice)

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Question 120

In costs-plus-fixed-fee contracts the allocation of a specific cost may be difficult to defend on the basis of any cause-and-effect reasoning.

Allocating common costs can best be achieved by using the stand-alone cost-allocation method.

Give examples of bundled products for each of the following industries: a.Resort hotel b.Bank c.Restaurant d.Computer store e.Super markets f.Personal care products manufacturer

Which of the following is a disadvantage of single-rate method?

The direct allocation method does not allocate support department costs to other support departments.

The selling prices method under stand-alone revenue-allocation method is best because the weights explicitly consider the prices customers are willing to pay for the individual products

Under the stand-alone method of allocating common costs ________.

When using the dual-rate method,the fixed cost allocation is based on ________.

The stand-alone method uses the product in the bundle with the most sale and then uses this ranking to allocate bundled revenues to individual products.

Revenue allocation based on the number of physical units is only appropriate when individual products in the bundle are of equal value.

An advantage of the single-rate method is that it is the most accurate method of cost-allocation.

Craylon Corp sells two products X and Y.X sells for $200 and Y sells for $150.Both X and Y sell for $300 as a bundle.What is the revenue allocated to product Y,if product X is termed as the primary product in the bundle?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

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