Question 1

Which of the following statements is true about the four common methods for allocating joint costs?

Accepted Answer

A)  None of the methods will consistently allocate joint costs more accurately than another.
B)  It is impossible to determine whether one of the four methods may be more appropriate than another based on the production process.
C)  The market value at split-off method is always the least appropriate method for allocating joint costs.
D)  The net realizable value method is always the least reliable method for allocating joint costs. A

Question 2

The following is a list of various departments in a diesel engine manufacturing/rebuilding facility. The company makes diesel engines for the locomotive industry. It also remanufactures its own previously built engines that need to be overhauled after several years of use. Classify each department below as either a support department or a production department.a.Support
b.Production
-Remanufacturing Department-works on engines needing overhauled

Accepted Answer

b

Question 3

Departmental information for the four departments at Samoa Industries is provided below.​  The Janitorial and Cafeteria departments are support departments. Determine the dollar amount of the Cafeteria Department costs to be allocated to the (a) Cutting and (b) Assembly departments using the direct method.

Accepted Answer

a. 120 ÷ (120 + 40) = 75%
75% × $50,000 = $37,500
b. 40 ÷ (120 + 40) = 25%
25% × $50,000 = $12,500

Question 4

Which of the following is not one of the commonly used methods for allocating support department costs to production departments?

Accepted Answer

A)  direct method
B)  sequential method
C)  reciprocal services method
D)  activity-based management method

Question 5

Match each description below to the appropriate step in the six-step process for allocating support department costs to production departments (a-f) Not all steps will be used.
-Directly trace and distribute overhead costs to support and production departments
A)Step 1
B)Step 2
C)Step 3
D)Step 4
E)Step 5
F)Step 6

Accepted Answer

The answer of Match each description below to the appropriate...

Question 6

The following is a list of various departments in a diesel engine manufacturing/rebuilding facility. The company makes diesel engines for the locomotive industry. It also remanufactures its own previously built engines that need to be overhauled after several years of use. Classify each department below as either a support department or a production department.a.Support
b.Production
-Tooling Department-ensures that tools for all production areas are where they need to be to build the engines

Accepted Answer

The answer of The following is a list of various...

Question 7

When weight factors are used in the weighted average method, they are

Accepted Answer

A)  multiplied by the actual physical units to arrive at weighted physical units
B)  divided by the actual physical units to arrive at weighted physical units
C)  added to the actual physical units to arrive at weighted physical units
D)  subtracted from the actual physical units to arrive at weighted physical units

Question 8

While none of the four common methods for allocating joint costs will consistently allocate joint costs more accurately than another, one method may be more appropriate than another depending on the production process.

Accepted Answer

A) True 
 B)False

Question 9

Airco Company is tempted to consider support department costs to be facility-level costs that do not need to be applied to products. Which of the following explains what is misguided about this approach?

Accepted Answer

A)  Product costs may be inaccurate because direct labor and direct materials are not correctly accounted for in the product costing system.
B)  Product costs may be inaccurate because incorrect cost drivers are used.
C)  Product costs may be inaccurate because support department services may be used more heavily by some products than others.
D)  Product costs may be inaccurate because straight-line depreciation on factory equipment is treated as a general and administrative expense on the income statement.

Question 10

Match each description below to the appropriate step in the six-step process for allocating support department costs to production departments (a-f) Not all steps will be used.
-Apply production department costs to products
A)Step 1
B)Step 2
C)Step 3
D)Step 4
E)Step 5
F)Step 6

Accepted Answer

The answer of Match each description below to the appropriate...

Question 11

Using the appropriate rationale, which of the following scenarios represents the proper determination of the order in which management should sequence support department allocations under the sequential method of allocating support department costs to production departments?

Accepted Answer

A)  A Janitorial support department with 50 employees should be allocated earlier than a Cafeteria support department with 25 employees.
B)  A Maintenance department with a less accurate cost driver should be allocated earlier than a Cafeteria support department with an extremely accurate cost driver.
C)  A Purchasing support department that serves one production department should be allocated earlier than a Janitorial support department serving five production departments.
D)  A Janitorial support department with a cost of $500,000 should be allocated earlier than a Purchasing support department with a cost of $30,000.

Question 12

The following is a list of the steps for using multiple production department rates to apply overhead to products. Put them in the proper order by item letter.

Accepted Answer

The answer of The following is a list of the...

Question 13

Which of the following statements is true about the direct method of allocating support department costs to production departments?

Accepted Answer

A)  The direct method is more difficult to use than the sequential method.
B)  The direct method allocates only some of the support department costs directly to production departments and is more accurate than the reciprocal services method.
C)  The direct method requires that the same cost driver be used for each support department.
D)  The direct method allocates all support department costs directly to production departments thus ignoring the possibility that some support departments may also serve other support departments.

Question 14

The revenues from by-products may be used to offset the costs of the joint production process or they may be reported as other revenue on the income statement (with no related cost of goods sold).

Accepted Answer

A) True 
 B)False

Question 15

Using the performance report for Scotland Beauty Products (including support department and joint cost allocations), evaluate the performance of the three production managers, specifically ranking them based on total costs.

Accepted Answer

The answer of Using the performance report for Scotland Beauty...

Question 16

Overhead can be applied to products using one of three different methods: single plantwide rate, multiple production department rates, and activity-based costing.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true?

Accepted Answer

A)  Support department cost allocations should be incorporated into a product costing system.
B)  Support department cost allocations should be incorporated into the general accounting system but do not need to be incorporated into a product costing system.
C)  Support department cost allocations can be ignored for more accurate product costing.
D)  Support department cost allocations should be rolled into the general and administrative costs associated with the corporate office expenses.

Question 18

When using multiple production department rates, there is a maximum of one support department per production process.

Accepted Answer

A) True 
 B)False

Question 19

Under the net realizable method of allocating joint costs, which of the following equations is used to compute the value of products processed beyond the split-off point?

Accepted Answer

A)  Net Realizable Value = Selling Price at Split-Off × Quantity
B)  Net Realizable Value = (Final Selling Price × Quantity)  + Additional Processing Costs
C)  Net Realizable Value = (Final Selling Price × Quantity)  - Additional Processing Costs
D)  Net Realizable Value = (Final Selling Price × Quantity)  ÷ Additional Processing Costs

Question 20

When using ABC to allocate overhead, there are only two commonly used methods: the direct method and the sequential method.

Accepted Answer

A) True 
 B)False

Exam 19: Support Department and Joint Cost Allocation

Which of the following statements is true about the four common methods for allocating joint costs?

Which of the following is not one of the commonly used methods for allocating support department costs to production departments?

When weight factors are used in the weighted average method, they are

While none of the four common methods for allocating joint costs will consistently allocate joint costs more accurately than another, one method may be more appropriate than another depending on the production process.

Airco Company is tempted to consider support department costs to be facility-level costs that do not need to be applied to products. Which of the following explains what is misguided about this approach?

Match each description below to the appropriate step in the six-step process for allocating support department costs to production departments (a-f) Not all steps will be used. -Apply production department costs to products A)Step 1 B)Step 2 C)Step 3 D)Step 4 E)Step 5 F)Step 6

Using the appropriate rationale, which of the following scenarios represents the proper determination of the order in which management should sequence support department allocations under the sequential method of allocating support department costs to production departments?

The following is a list of the steps for using multiple production department rates to apply overhead to products. Put them in the proper order by item letter.

Which of the following statements is true about the direct method of allocating support department costs to production departments?

The revenues from by-products may be used to offset the costs of the joint production process or they may be reported as other revenue on the income statement (with no related cost of goods sold).

Using the performance report for Scotland Beauty Products (including support department and joint cost allocations), evaluate the performance of the three production managers, specifically ranking them based on total costs.

Overhead can be applied to products using one of three different methods: single plantwide rate, multiple production department rates, and activity-based costing.

Which of the following statements is true?

When using multiple production department rates, there is a maximum of one support department per production process.

Under the net realizable method of allocating joint costs, which of the following equations is used to compute the value of products processed beyond the split-off point?

When using ABC to allocate overhead, there are only two commonly used methods: the direct method and the sequential method.