Exam 14: Period Cost Allocation

Answer the following questions using the information below: Jake's Battery Company has two service departments,Maintenance and Personnel.Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours.Personnel Department costs of $80,000 are allocated based on the number of employees.The costs of operating departments A and B are $160,000 and $240,000,respectively.Data on budgeted maintenance-hours and number of employees are as follows: -Using the step-down method,what amount of Maintenance Department cost will be allocated to Department B if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)

Benefits of the dual-rate method include

Answer the following question(s)using the information below: The Fancy Flier Airplane Corporation has a central materials laboratory.The laboratory has only two users,the Large Plane Department and the Small Plane Department.The following data apply to the coming budget year: Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Large Plane Department was 6,000 technician hours and by the Small Plane Department was 6,500 technician hours. -If a dual-rate cost allocation method is used,what amount of materials laboratory costs will be allocated to the Small Plane Department? Assume budgeted usage is used to allocate materials laboratory costs and actual usage is used to allocate variable materials laboratory costs.

Answer the following question(s)using the information below: The Bonawitz Corporation has a central copying facility.The copying facility has only two users,the Marketing Department and the Operations Department.The following data apply to the coming budget year: Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Marketing Department was 40,000 copies and by the Operations Department was 180,000 copies. -If a dual-rate cost allocation method is used,what amount of copying facility costs will be budgeted for the Operations Department?

Seacrest Corp.allocates support department overhead costs to operating departments X and Y by means of the reciprocal allocation method.Information for the current month is as follows: Required: Provide the linear equation that represents the complete reciprocated cost of Support Department A.

Use the information below to answer the following question(s). Data Source Media manufactures cassettes and CDs in separate divisions utilizing one plant location.The following data have been prepared for review. -What is the total cost per hour of use for the Cassette Division assuming budgeted usage is the allocation base and a single-rate method is used?

For the economic decision purpose

A company might choose to allocate corporate costs to various divisions within the company for what four purposes? Give an example of each.

Answer the following question(s)using the information below: Betty's Book and Music Store has two service departments,Warehouse and Data Centre.Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours.Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours.The costs of operating departments Music and Books are $125,000 and $150,000,respectively.Data on budgeted warehouse-hours and number of computer log-on hours are as follows: -Using the step-down method,what amount of Data Centre Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)

Landmark Systems Inc.designs and manufactures global positioning navigation systems for all-terrain vehicles and water craft.It has two support departments: Design and Engineering;and,two production departments,Vehicle Systems and Water Craft Systems. The budgeted level of service relationships at the start of the year was: Landmark Systems Inc.collects fixed costs and variable costs of each support department in separate pools.The budgeted costs for the year were: Support department pools are combined by cost behavior for allocation purposes. Production statistics (actual)are as follows: Required: a.Allocate the support department variable costs using the dual-rate method.The company policy is to use design and engineering hours as the allocation base for variable costs;and,units produced for fixed costs.(round to the nearest cent) b.Allocate the support department variable costs using the reciprocal method. c.Comment on the effect from combining the variable cost pools as opposed to considering them separately when applying the allocation methods.

Correl Company's power plant provides electricity for its two operating departments,A and B.The year 2015 budget for the power plant shows: Required: a.Compute the power plant costs allocated to A and B using the single-rate method with budgeted usage as the allocation base. b.Compute the power plant costs allocated to A and B using the dual-rate method with actual usage as the allocation base for variable costs and budgeted usage as the allocation base for fixed costs. c.From the standpoint of Departments A and B,what are the two main benefits of the dual-rate method?

Scarborough Sales,a real estate company specializing in apartment rentals and home sales,is having difficulty in gathering appropriate cost information for evaluating its operations.It owns several large apartment complexes and sells homes owned by builders or existing homeowners.As the company's new accountant you define cost by major activity.You use this information for allocating costs to cost objects.Also,cost pools are created for appropriate cost allocations.The owner of the company is interested in exactly what you have done,and why it appears to be working so smoothly. Required: Briefly state the four purposes for allocating costs to cost objects and give two examples of how each can be used for the real estate company.

The reciprocal allocation method does not incorporate interdepartmental relationships fully into the support department cost allocations.

Use the information below to answer the following question(s). General Media manufactures cassettes and CDs in separate divisions utilizing one plant location.The following data have been prepared for review. -What are the fixed cost per year and the variable cost per hour for the General Media CD Division if the dual-rate method is used? Assume that the allocation bases are budgeted usage for fixed costs and for variable costs.

The fixed costs of operating the maintenance facility of General Hospital are $4,500,000 annually.Variable costs are incurred at the rate of $30 per maintenance-hour.The facility averages 40,000 maintenance-hours a year.Budgeted and actual hours per user for the year are as follows: Assume that budgeted maintenance-hours are used to calculate the allocation rates. Required: a.If a single-rate cost allocation method is used,what amount of maintenance cost will be budgeted for each department? b.If a single-rate cost allocation method is used,what amount of maintenance cost will be allocated to each department based on actual usage? c.If a dual-rate cost allocation method is used,what amount of maintenance cost will be budgeted for each department? d.If a dual-rate cost allocation method is used,what amount of maintenance cost will be allocated to each department based on budgeted usage for fixed operating costs and actual usage for variable operating costs?

Use the information below to answer the following question(s). General Media manufactures cassettes and CDs in separate divisions utilizing one plant location.The following data have been prepared for review. -What is the allocated cost to the two General Media divisions,respectively,if the single rate is $1,000? Assume that the Cassette and CD Divisions used 1,750 and 200 hours,respectively.

The ability-to-bear criterion is considered superior when the purpose of cost allocation is motivation.

The single-rate method makes a distinction between fixed and variable costs.

Use the information below to answer the following question(s). Joe's Tire Company has two support departments,Personnel and Maintenance.The Maintenance Department costs of $80,000 are allocated on the basis of standard service hours used.The Personnel Department costs of $20,000 are allocated based on the number of employees.Costs of Departments A and B are $40,000 and $60,000,respectively. Data on standard service hours and number of employees are as follows: -How much of the cost of the Maintenance Department is allocated to Department B using the direct method?

The costs of unused capacity are highlighted when