Exam 11: Service Department and Joint Cost Allocation

Atkinson,Inc. ,manufactures products A,B,and C from a common process.Joint costs were $60,000.Additional information is as follows: Assuming that joint production costs are allocated using the physical quantities method (units produced),what were the costs allocated to Product A?

Which of the following departments is not a service department in a typical manufacturing company?

Jamison Company has two service departments and two producing departments.Square footage of space occupied by each department follows: Custodial services 1,000 General administration 3,000 Producing department A 8,000 Producing department B 20,000 The department costs of Custodial Services are allocated on a basis of square footage of space.If Custodial Services costs are budgeted at $38,000,the amount of cost allocated to General Administration under the direct method would be:

Which of the following methods provides no data for service departments to monitor each other's costs?

In general,it is better to use a product's market value at the split-off point than its estimated net realizable value in allocating joint costs.

Boston Corporation has two production Departments: Assembly and Machining and two service departments: Personnel and Cafeteria.Direct costs for each department and the proportion of service costs used by the various departments for the month of July,2016 are as follows: Required: Compute the allocation of service department costs to producing departments for July,2016 using the step-method.

Delite Confectionary Company produces various types of candies.Several candies could be sold at the split-off point or processed further and sold in a different form after further processing.The candies are produced in a joint processing operation with $500,000 of joint processing costs monthly,which are allocated based on pounds produced.Information concerning this process for a recent month appears below: Based on the information presented,which of the products should be processed further?

Data Master is a computer software consulting company.Its three major functional areas are computer programming,information systems consulting,and software training.Cynthia Moore,a pricing analyst in the Accounting Department,has been asked to develop total costs for the functional areas.These costs will be used as a guide in pricing a new contract.In computing these costs,Moore is considering three different methods of allocating overhead costs-the direct method,the step method,and the reciprocal method.Moore assembled the following data on overhead from its two service departments,the Information Systems Department and the Facilities Department. Information systems is allocated on the basis of hours of computer usage;facilities are allocated on the basis of floor space.Required: Allocate the service department costs to the user departments using the reciprocal method.Round to the nearest dollar.

The Joplin Company conducts a simple chemical process in Department #1,which produces three separate items: A,K,and H.A is processed further in Department #2.K is processed further in Department #3.Product H is a by-product,to be accounted for by the cost reduction method.The following information relates to September: Department #1's costs $420,000.Department #2's costs $150,000.Department #3's costs $60,000.A: 25,000 pounds completed;23,500 pounds sold for $12 per pound.K: 75,000 pounds completed;70,000 pounds sold for $7.50 per pound.H: 10,000 pounds completed;10,000 pounds sold for $1.50 per pound.(There are shipping costs of $0.30 per pound. ) There were no September 1^st inventories.Required: Prepare a schedule to show the computation for the unit costs per pound for Products A,K,and H assuming Joplin uses the estimated net realizable value method to allocate joint costs to the main products.

Smokey Enterprises buys Liquid Charcoal for $0.80 a gallon.At the end of processing in department 1,the liquid charcoal splits off into Products U,V,and W.Product U is sold at the split-off point,with no further processing.Products V and W require further processing before they can be sold;Product V is processed in Department 2,and Product W is processed in Department 3.Following is a summary of costs and other related data for the most recent accounting period: There were no beginning inventories and there was no liquid charcoal on hand at the end of the period.All gallons on hand in ending inventory were complete as to processing.Smokey uses the estimated net realizable value method of allocating joint costs.Required: a.Determine the product cost for U,V,and W,assuming the physical quantity method is used to allocate joint costs.b.Determine the product cost for U,V,and W,assuming the net realizable value method is used to allocate joint costs.

Which of the following statements is false?