Exam 7: Allocating Costs of Support Departments and Joint Products

Examples of producing departments include all of the following EXCEPT

Figure 7-6 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: - Refer to Figure 7-6.Using the sequential method, if the support department with the highest percentage of interdepartmental service is allocated first, the cost of the support departments allocated to Department P1 is

Anderson Company pays a flat fee of $500 for the right to retrieve stray golf balls from lakes and ponds at golf and country clubs.The recovered balls are then cleaned, graded as to quality (birdie, bogey, or duffer), and sold to sporting goods stores at the following prices per dozen: birdie quality, $5; bogey quality, $4; and duffer quality, $3.Last month $8,000 of cost was incurred retrieving the following quantities of golf balls: birdie quality, 1,000 dozen; bogey quality, 3,000 dozen; and duffer quality, 2,000 dozen. Required: (Calculate relative quantity to three decimal points.)

Figure 7-7 Eden Company manufactures two products, Brights and Dulls, from a joint process.A production run costs $50,000 and results in 250 units of Brights and 1,000 units of Dulls.Both products must be processed past the split-off point, incurring separable costs for Brights of $60 per unit and $40 per unit for Dulls.The market price is $250 for Brights and $200 for Dulls. - Refer to Figure 7-7.What is the amount of joint costs allocated to Brights using the net realizable value method?

A common cost occurs

Figure 7-7 Eden Company manufactures two products, Brights and Dulls, from a joint process.A production run costs $50,000 and results in 250 units of Brights and 1,000 units of Dulls.Both products must be processed past the split-off point, incurring separable costs for Brights of $60 per unit and $40 per unit for Dulls.The market price is $250 for Brights and $200 for Dulls. - Refer to Figure 7-7.What is the gross profit for Dulls assuming the constant gross margin percentage method is used?

Suppose that a sawmill processes logs into four grades of lumber totaling 500,000 board feet as follows at a joint cost of $300,000: What amount of joint costs will be allocated to No.1 common using the final sales value method?

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

Figure 7-1 Yo Department Store incurred $4,000 of indirect advertising costs for its operations.The following data has been collected for 2011 for its three departments: - Refer to Figure 7-1.How much of the indirect advertising costs will be allocated to the Shoes Department if newspaper ad space is the activity driver?

Which of the following industries would most likely have joint costs in production?

Crow Company applies factory overhead in its two producing departments using a predetermined rate based on budgeted machine hours in the Mixing Department and based on budgeted labor hours in the Packaging Department.Variable cafeteria costs are allocated to the producing departments based on budgeted number of employees, and fixed costs are allocated based on the capacity number of employees.Variable maintenance costs are allocated on the budgeted number of direct labor hours, and fixed costs are allocated on labor hour capacity.The data concerning next year's operations are as follows: Required:

Quan Company has three support departments whose direct department costs are $20,000, $30,000, and $40,000, respectively, and two producing departments whose direct department costs are $400,000 and $360,000, respectively.The combined total department cost for the producing departments after allocation of the support departments is

Figure 7-2 Alpha Company's travel department had the following budgeted costs for the coming year: - Refer to Figure 7-2.Using a single charging rate, determine the rate per trip.

Foster Company incurred $200,000 to manufacture the following products in a joint process: How much joint cost would be allocated to Product I based on the physical units method?

Support department costs are _______________ to the producing departments.

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. -What is S2's cost equation?

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: Required:

Support departments

The following information pertains to Utter Company: Utter Company 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 labor hours. What is the amount of maintenance costs allocated to the Assembly Department using the direct method? (Round amounts to dollars.)

What is the most likely action to be taken by a company when a support department is NOT as cost effective as an outside source?