Exam 12: Cost Allocation

_____ is a traditional way of allocating joint costs to products.

Jefferson Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs $60,000) pooled together to arrive at the following information: Number of Number of Number of Product Setups Components DLH Standard 22 8 375 Deluxe 28 12 225 Costs per pool \ 15,000 \ 36,000 \ 9,000 _____ is the total amount of overhead costs assigned to the standard model assuming activity-based costing is used.

A cost pool is a group of individual costs that is allocated to cost objectives using multiple cost drivers.

Serena Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year: Maintenance Personnel Mixing Finishing Direct dept. costs \ 126,000 \ 84,000 \ 105,000 \ 175,000 Square footage 800 400 1,600 1,200 Number of employees 8 12 24 32 If the step-down method is used to allocate costs and the Maintenance Department is allocated first, then the amount of overhead that would be allocated from Maintenance to Finishing is _____.

Service departments that support other service departments in addition to producing departments

Euclid College recently leased a photocopy machine for $1,500 per month plus $0.04 per copy.Additional variable operating costs were $0.02 per copy.Euclid College estimated it would produce 30,000 copies per month.The Accounting Department estimated it would produce 6,000 copies, but actually produced only 4,000 copies.If Euclid College uses a predetermined rate per copy, then _____ would be allocated to the Accounting Department.

Ronnie Company manufactures three products from a joint process.Joint costs for the year amounted to $300,000.The following data are also available: Sales Value at Product Units Produced Split-off 5,000 \ 70,000 3,000 \ 30,000 2,000 \ 100,000 Assuming the physical-units method of allocating joint costs, the amount of joint costs allocated to product X would be _____.

Polk Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs $60,000) pooled together to arrive at the following information: Number of Number of Number of Product Setups Components DLH Standard 22 8 375 Deluxe 28 12 225 Costs per pool \ 15,000 \ 36,000 \ 9,000 _____ is the total amount of overhead costs assigned to the deluxe model assuming activity-based costing is used.

Samuel Company has two production departments, Mixing and Finishing, served by one maintenance department.Budgeted fixed costs for the maintenance department were $40,000, and the variable cost per labor hour was $4.00.Other relevant data are as follows: Mixing Finishing Long-run capacity available* 18,000 12,000 Budgeted* 12,000 10,500 Actual* 15,000 9,000 *in labor hours Actual maintenance department costs were $36,000 fixed and $100,000 variable.The amount of fixed maintenance costs allocated to the Mixing Department should be _____.

Two conventional ways of allocating joint costs to products are physical units and relative sales values.

Roosevelt Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs $60,000) pooled together to arrive at the following information: Number of Number of Number of Product Setups Components DLH Standard 22 8 375 Deluxe 28 12 225 Costs per pool \ 15,000 \ 36,000 \ 9,000 _____ is the total amount of overhead costs assigned to the deluxe model assuming traditional costing and applying overhead costs based on direct-labor hours is used.

The traditional approach to cost allocation assumes that all costs are caused by a single cost driver.

The preferred cost drivers for fixed-cost pools and variable-cost pools are _____.

The step-down method sequence of allocations begins with the service department that renders the greatest service to the greatest number of service departments.

The greatest virtue of the step-down method is _____.

The preferred cost driver for allocating central costs

The _____ method recognizes that some service departments support the activities in the service departments as well as those in production departments.

Companies must assign all costs for internal management purposes.

Units that exist only to support other departments

ABC systems focus on accumulating costs into key activities, rather than into organizational units.