Exam 7: Allocating Costs of Support Departments and Joint Products

Ely 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?

Figure 7-2 Long Distance Company's travel department had the following budgeted costs for the coming year: West Sales Territory 100 trips Midwest Sales Territory 150 trips Southern Sales Territory 160 trips Eastern Sales Territory 140 trips -Refer to Figure 7-2. Using a single charging rate, determine the rate per trip.

Figure 7-7 Garden of 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 constant gross margin percentage method?

Figure 7-2 Long Distance Company's travel department had the following budgeted costs for the coming year: West Sales Territory 100 trips Midwest Sales Territory 150 trips Southern Sales Territory 160 trips Eastern Sales Territory 140 trips -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)

Figure 7-3 Hanover and Trust, 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)

Figure 7-7 Garden of 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?

Products with substantial value which are produced simultaneously by the same process up to a split-off point are called:

Cumadin Corporation, which manufactures Products W, X, Y, and Z through a joint process costing $18,000, has the following data for 2016: What is the amount of joint costs assigned to Product Y using the sales-value-at-split-off method?

Figure 7-3 Hanover and Trust, 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, if the total pages printed were 340,000, which of the following statements is correct?

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

If the allocation is for performance evaluation, the allocation of variable support department costs would be calculated as

Departmental overhead rate is computed by dividing the budgeted base by the total overhead in a producing department.

Mandala Inc. obtains two products and a by-product from its production process. By-product revenues are treated as other income and a noncost approach is used to assign costs to them. During the period, 1,200 units were processed at a cost of $12,000 for materials and conversion costs, resulting in the following: Required: a. Account for all costs using a physical basis for allocation. b. Account for all costs using net realizable value as the basis for allocation. c. Account for all costs using final sales value as the basis for allocation. d. How much joint costs should be allocated to the by-product?

A possible causal factor to use when allocating cafeteria costs would be

Which of the following would be the most appropriate base for allocating the costs of the maintenance department?

The three methods of allocating support center costs to producing departments are the direct, sequential, and reciprocal methods.

Which of the following is a by-product?

Support departments

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

Figure 7-6 Golden Leaves 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