Exam 7: Allocating Costs of Support Departments and Joint Products

Lake Corporation manufactures two products, AA and BB, from a joint process.A production run costs $20,000 and results in 500 units of AA and 2,000 units of BB.Both products must be processed past the split-off point, incurring separable costs of $5 per unit for AA and $10 per unit for BB.The market price is $25 for AA and $20 for BB. Required:

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 direct method, the cost of the Personnel Department allocated to Department P1 is

Which of the following is a by-product?

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 Dulls using the physical units method?

Figure 7-3 Wilson and Lewis, a large law firm, utilizes an internal centralized printing center to serve its three departments: Individuals, Corporate, Trust.The costs of the printing department include fixed costs of $69,190 and variable costs of $0.04 per page.Total estimated print pages are estimated to be 330,000 pages.Individuals are estimated to use 130,000; Corporate will use 165,000 and 35,000 from the trust area. - Refer to Figure 7-3.If the Corporate Department used 190,000 pages, what would be the printing charges for the Corporate Department? (round to the nearest cent)

Jacob Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y.The Maintenance Department costs of $60,000 are allocated on the basis of standard service hours used.The Personnel Department costs of $9,000 are allocated on the basis of number of employees.The direct costs of Departments X and Y are $18,000 and $30,000, 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 Y assuming the direct method is used?

Horn Bank has two bank locations: Main and Rural.The central office provides check-processing services for the two banks.Information pertaining to the banks is as follows: Required:

If a support department's costs were budgeted to be $150,000 and actual costs incurred by the support department were $200,000, the total amount of the support department's costs that should be allocated to other departments is

Fixed support department costs should be allocated based on

Which joint cost allocation method is described by the following statement? Each product is assigned a weighting factor which is multiplied by the number of units.Joint cost is prorated to the products on the basis of each product's share of total weighted units.

The split-off point can best be defined as

A ___________________ is a secondary product recovered in the course of manufacturing a primary product during a joint process.

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 is the gross profit of product Y assuming the net realizable value method is used?

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.What are the total overhead costs associated with P2 after allocating the Maintenance and Personnel Departments using the direct method?

Figure 7-3 Wilson and Lewis, a large law firm, utilizes an internal centralized printing center to serve its three departments: Individuals, Corporate, Trust.The costs of the printing department include fixed costs of $69,190 and variable costs of $0.04 per page.Total estimated print pages are estimated to be 330,000 pages.Individuals are estimated to use 130,000; Corporate will use 165,000 and 35,000 from the trust area. - Refer to Figure 7-3.If the total pages printed were 340,000, which of the following statements is correct?

Duff Company uses a job-order costing system to compute product costs.There are two producing departments (P1 and P2) and two support departments (S1 and S2).The costs incurred in S1 and S2 are allocated to Departments A and B and included in their factory overhead rates for costing products.S1 costs are allocated based on the number of employees, S2 costs are allocated based on direct labor hours, and the production departmental overhead rates are also based on direct labor hours.The following data are available for a recent period: Required:

Which of the following cost categories would most likely use machine hours as its activity driver?

Plants Company has two support departments (S1 and S2) and two producing departments (P1 and P2).Department S1 costs are allocated on the basis of number of employees, and Department S2 costs are allocated on the basis of space occupied expressed in square feet. Data on direct department costs, number of employees, and space occupied are as follows: When Plants uses the sequential method, the support department allocated first is the one with the highest percentage of interdepartmental service.The choice of the department allocated first is determined by the comparison of the following ratio for S1 and S2, respectively:

Which of the following methods allocates joint production costs based on the pounds of product produced?

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 Y assuming the direct method is used?