Exam 7: Allocating Costs of Support Departments and Joint Products

A company incurred $120,000 of common fixed costs and $180,000 of common variable costs.These costs are to be allocated to Departments XX and YY.Data on capacity provided and capacity used are as follows: Assume that both fixed and variable costs are allocated on the basis of capacity used.The fixed and variable costs allocated to Department XX are

Morris Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y.The Maintenance Department costs of $30,000 are allocated on the basis of standard service hours used.The Personnel Department costs of $4,500 are allocated on the basis of number of employees.The direct costs of Departments X and Y are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows: - What are the total overhead costs associated with Department X after allocating the Maintenance and Personnel Departments using the direct method?

A company incurred $120,000 of common fixed costs and $180,000 of common variable costs.These costs are to be allocated to Departments XX and YY.Data on capacity provided and capacity used are as follows: Assume that common fixed costs are to be allocated to Departments XX and YY on the basis of capacity provided and that common variable costs are to be allocated to Departments XX and YY on the basis of capacity used.The fixed and variable costs allocated to Department XX are

Newton Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2.The Maintenance Department costs of $120,000 are allocated on the basis of standard service hours used.The Personnel Department costs of $18,000 are allocated on the basis of number of employees.The direct costs of Departments P1 and P2 are $36,000 and $60,000, respectively. Data on standard service hours and number of employees are as follows: What are the total overhead costs associated with P1 after allocating the Maintenance and Personnel Departments using the direct method?

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 first and second using the physical units method?

Deli Products produces two products, X and Y, in a single process.In 2011, 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 net realizable value method?

Describe the differences between support and producing departments.Give three examples of each.

Which of the following would generally be a by-product?

Which of the major objectives of allocation as identified by the IMA would NOT be relevant in a service organization?

FIGURE 7-4 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 center 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: - Refer to Figure 7-4.For purposes of performance evaluation, fixed costs allocated to Copy Center 2 are

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

If the costs of support departments are NOT allocated to producing departments,

Figure 7-2 Alpha Company's travel department had the following budgeted costs for the coming year: - Refer to Figure 7-2.Using both a fixed and variable rate with fixed costs allocated on the basis of monthly peak trips, what will the West Sales Territory be charged for the year? (round to the nearest dollar)

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

Basic guidelines that should be followed when allocating support department costs include

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: Predetermined overhead rates for Departments X and Y, respectively, are based on direct labor hours. - What is the overhead rate for Department X assuming the direct method is used?

Which of the following is NOT a major objective of allocation as identified by the IMA?

FIGURE 7-4 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 center 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: - Refer to Figure 7-4.Support department costs NOT allocated to the two copy centers are

Savings Bank of Lawrence has three revenue-generating departments: checking accounts, savings accounts, and loans.The bank also has three service areas: administration, personnel, and accounting.The direct costs per month and the interdepartmental service structure are shown below: How much cost would be allocated to the savings account area from administration using the direct method?

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 Brights assuming the net realizable value method is used?