Exam 7: Allocating Costs of Support Departments and Joint Products

Staff Company allocates common Building Department costs to producing departments (P1 and P2) based on space occupied, and it allocates common Personnel Department costs based on the number of employees.Space occupancy and employee data are as follows: If Staff Company uses the sequential allocation method and the support department with the highest percentage of interdepartmental services is allocated first, the ratio representing the portion of Personnel Department costs allocated to Department P2 is

If a support department's costs were budgeted to be $75,000 and actual costs incurred by the support department were $70,000, the total amount of the support department's costs that should be allocated to other departments is

A joint cost allocation method that would assign the same amount of cost per unit to two joint products that sell for $10 and $40, respectively, is the

Joint costs are

Which of the following is NOT a benefit of the costs of support departments being allocated to production departments?

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 Maintenance Department allocated to Department P1 is

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 physical units method is used?

Which of the following is a by-product of agricultural and food industries?

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: The savings bank uses the sequential (step) method and the service departments are allocated in the following order: administration, personnel, and accounting.How much cost would be allocated to the loan area from the personnel department using the sequential/step method? (Round to two decimal places.)

The cost of crude oil used in producing gasoline products is an example of

Beef Products produces two products, hamburger and steaks, in a single process.In 2011, the joint costs of this process were $36,000.In addition, 20,000 pounds of hamburger and 10,000 pounds of steaks were produced.Separable processing costs beyond the split-off point were: hamburger, $7,500; steaks, $4,500.Hamburger sells for $2 per pound; steaks sells for $4 per pound. Required:

Which of the following departments is NOT a support department?

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

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 Cosmetics Department if direct advertising costs is the activity driver?

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 S1's cost equation?

Staff Company allocates common Building Department costs to producing departments (P1 and P2) based on space occupied, and it allocates common Personnel Department costs based on the number of employees.Space occupancy and employee data are as follows: If Staff Company uses the direct allocation method, the ratio representing the portion of building costs allocated to Department P1 is

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 physical units method is used?

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.Assuming a single charging rate is used, what would be the charge per page? (round to the nearest cent)

A company incurred $40,000 of common fixed costs and $60,000 of common variable costs.These costs are to be allocated to Departments A and B.Data on capacity provided and capacity used are as follows: Assume that common fixed costs are to be allocated to Departments A and B on the basis of capacity provided and that common variable costs are to be allocated to Departments A and B on the basis of capacity used.The fixed and variable costs allocated to Department A are

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 1 are