Exam 12: Cost Allocation

Train Company has two service departments,Maintenance and Human Resources.Train Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while Human Resources costs are allocated based on number of employees.The following information has been gathered for the current year: Human Maintenlance Resources Mixing Finishing Direct costs \ 50,400 \ 33,600 \ 42,000 \ 70,000 Square footage 1,600 800 3,200 2,400 Number of employees 16 24 48 64 If the direct method is used to allocate service department costs,then the total cost of the Human Resources Department after the Maintenance Department cost allocation would be ________.

The Computer Department in a large company provides services to many departments.The cost driver for costs in the Computer Department is the number of computer hours.When allocating variable costs of the Computer Department to a user department,which of the following formulas is used?

Service department costs can be assigned to ________.

The direct method of allocating service department costs to producing departments ignores ________.

When allocating fixed costs from service departments to user departments,a predetermined lump-sum allocation based on the long-range capacity available to the user should be used.

Patrick Company makes three types of products.The company has two types of customers.The cost to serve all customers is $12,000 and is allocated to customer types based on the number of manager visits to customer locations.The following data are available: product 1 product 2 product 3 Sales \ 5,000 \ 6,000 \ 30,000 Cost of goods sold Gross margin \1 ,000 \1 ,200 \1 5,000 Customer type 1 Customer type 2 Product 1 Sales \ 500 \ 4,500 Product 2 Sales \ 1,000 \ 5,000 Product 3 Sales \ 16,000 \ 14,000 Manager visits 4 16 What is the gross profit margin for all three products for Customer Type 2?

Customer profitability does NOT depend on ________.

Customers with a high cost to serve have ________.

In practice,companies often inappropriately allocate fixed cost pools for service departments to producing departments on the basis of ________ instead of ________.

Goyette Company processes copper ore into two products,C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Goyette 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 relative-sales-value method of allocating joint costs.What amount of joint costs is allocated to Product C?

Managers allocate the salaries of human resource personnel to a producing department.The salaries are considered to be a(n)________ for the producing department and a(n)________ for the human resource department.

Wenzel Company has two service departments,Maintenance and Human Resources.Wenzel Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while Human Resources costs are allocated based on number of employees.The following information has been gathered for the current year: Human Maintenlance Resources Mixing Finishing Direct costs \ 50,400 \ 33,600 \ 42,000 \ 70,000 Square footage 1,600 800 3,200 2,400 Number of employees 16 24 48 64 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 Human Resources Department?

When allocating service department costs to producing departments,which of the following guidelines is NOT followed?

The cost to serve percentage for a customer equals ________.

An example of central corporate support costs includes ________.

Service departments in organizations exist to support ________.

Johnson Company's power plant provides electricity to two producing departments.The annual budget for the power plant shows the following: Budgeted fixed costs \5 00,000 Budgeted variable costs per kilowatt hour \1 Actual annual costs incurred by the power plant were: Actual fixed costs \2 15,000 Actual variable costs \3 50,000 Additional annual data follows: Poducing Department 1 Poducing Department 2 Capacity available 250,000 kilowatt hours 150,000 kilowatt hours Capacity used 270,000 kilowatt hours 165,000 kilowatt hours Required: A) Compute the amount of fixed costs allocated to each producing department. B) Compute the amount of variable costs allocated to each producing department.

Which of the following formulas should be used to allocate variable costs from service departments to user departments?

Stevie Company has two service departments,Maintenance and Human Resources.Stevie Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while Human Resources costs are allocated based on number of employees.The following information has been gathered for the current year: Human Maintenlance Resources Mixing Finishing Direct costs \ 50,400 \ 33,600 \ 42,000 \ 70,000 Square footage 1,600 800 3,000 2,000 Number of employees 16 24 40 60 If the direct method is used to allocate service department costs,then the cost allocated from the Maintenance Department to the Mixing Department is ________.

Robertson Company has two production departments called Assembly and Finishing.The maintenance department serves both production departments.Maintenance costs are allocated based on labor hours.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: Assembly Finishing Capacity available 18,000 labor hours 12,000 labor hour: Capacity used 15,000 labor hours 9,000 labor hours Actual maintenance department costs: Fixed \ 36,000 Variable \ 100,000 The amount of fixed maintenance department costs allocated to the Finishing Department should be ________.