Exam 11: Service Department and Joint Cost Allocation

The following set up is a system of simultaneous linear equations to allocate costs using the reciprocal method.Matrix algebra is not required.The following costs were incurred in three operating departments and three service departments in Reality Company. Use of services by other departments is as follows. The equation for department P2 (final assembly)is:

Which of the following statements about maximizing the profit of joint product processes is true?

The Emery Construction Company occupies 85,000 square feet for construction of mobile homes.There are two manufacturing departments,finishing and assembly,and four service departments labeled S1,S2,S3,and S4.Information relevant to Emery is as follows: Rent paid for the area used is $720,000.How much rent would be charged to S4 using the step method of allocation and a S3-S4-S1-S2 sequence for the allocations?

The RAH Manufacturing Company has two service departments: Maintenance and Accounting.The Maintenance Department's costs of $300,000 are allocated on the basis of machine hours.The Accounting Department's costs of $120,000 are allocated on the basis of the number of employees within a specific department.The direct departmental costs for A and B are $300,000 and $500,000,respectively. What is the Maintenance Department's cost allocated to Department A using the direct method?

Which of the following cost items is not allocable as joint costs when a single manufacturing process produces several main products and several by-products?

Which of the following is a weakness of the step method of service cost allocations?

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

Criteria for selecting allocation bases for service department allocations should not include:

Which of the following is not a benefit of cost allocation?

Castle Company has two service departments and two producing departments.The number of employees in each department is: The department costs of the Personnel Department are allocated on a basis of the number of employees.If these costs are budgeted at $37,125 during a given period,the amount of cost allocated to Department B under the direct method would be:

Brandeis Corporation has two production Departments: P1 and P2 and two service departments: S1 and S2.Direct costs for each department and the proportion of service costs used by the various departments for the month of July are as follows: Under the direct-method of cost allocation,the amount of S1 costs allocated to P1 would be:

Bagley Company has two service departments and two producing departments.Square footage of space occupied by each department follows: 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:

Allocation of factory service department costs to the production departments is necessary to:

There are several methods for allocating service department costs to production departments.The method which recognizes service provided by one service department to another but does not recognize reciprocal interdepartmental service is called: (CMA adapted)

The following set up is a system of simultaneous linear equations to allocate costs using the reciprocal method.Matrix algebra is not required.The following costs were incurred in three operating departments and three service departments in Reality Company. Use of services by other departments is as follows. The equation for department S1 (building occupancy)is:

The physical quantities method allocates joint costs so that each joint product has the same gross margin as a percentage of sales.Each product has the same cost per pound (or foot,or gallon,etc).

Which of the following is not a step needed to maximize the profits from joint products?

Which of the following best describes the objective of joint cost allocation?

Which of the following is the least practical reason for allocating service department costs to user departments?