Exam 7: Allocating Costs of Support Departments and Joint Products

Which of the following allocation methods fully recognizes services that support departments provide to each other?

Carson Wood Products processes logs into four grades of lumber totaling 500,000 board feet as follows at a joint cost of $300,000: What amount of joint costs will be allocated to No. 2 common using the constant gross margin percentage method?

Refer to Figure 7-1. How much of the indirect advertising costs will be allocated to the Lingerie Department if direct advertising costs is the activity driver? (Round to the nearest dollar if necessary)

The __________ charging rate combines variable and fixed costs of support departments.

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

Which joint cost allocation method is described by the following statement? Each product is assigned a weighting factor which is multiplied by the number of units. Joint cost is prorated to the products on the basis of each product's share of total weighted units.

A secondary product recovered in the course of manufacturing a primary product during a joint process is called a:

Abound Company has two support departments (S1 and S2) and two producing departments (X and Y). Department S1 serves Departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%. Department S2 serves Departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%. Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively. What are the total costs to be allocated from Department S2?

Common costs are mutually beneficial costs, used in the output of two or more services or products.

FIGURE 7-4 Copies Plus Print operates a copy business at two different locations. Copies Plus Print has one support department that is responsible for cleaning, service, and maintenance of its copying equipment. The costs of the support department are allocated to each copy center on the basis of total copies made. During the first month, the costs of the support department were expected to be $200,000. Of this amount, $60,000 is considered a fixed cost. During the month, the support department incurred actual variable costs of $128,000 and actual fixed costs of $72,000. Normal and actual activity (copies made) are as follows: Refer to Figure 7-4. For purposes of performance evaluation, fixed costs allocated to Copy Center 1 are

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?

Fairfield Company allocates common Building Department costs to producing departments (P1 and P2) based on space occupied, and it allocates common Personnel Department costs based on the number of employees. Space occupancy and employee data are as follows: If Fairfield Company uses the direct allocation method, the ratio representing the portion of building costs allocated to Department P1 is

Oxide Company has two support departments (S1 and S2) and two producing departments (X and Y). Department S1 serves Departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%. Department S2 serves Departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%. Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively. What is S2's cost equation?

Cumadin Corporation, which manufactures Products W, X, Y, and Z through a joint process costing $18,000, has the following data for 2014: What is the amount of joint costs assigned to Product Y using the sales-value-at-split-off method?

Santiago Manufacturing prices its products at full cost plus 40 percent. The company operates two support departments and two producing departments. Budgeted costs and normal activity levels are as follows: Support Department A's costs are allocated based on square feet, and Support Department B's costs are allocated based on number of employees. Department C uses direct labor hours to assign overhead costs to products, while Department D uses machine hours. One of the products the company produces requires 4 direct labor hours per unit in Department C and no time in Department D. Direct materials for the product cost $45 per unit, and direct labor is $20 per unit. If the direct method of allocation is used and the company follows its usual pricing policy, the selling price of the product would be

Causal factors are variables or activities within a producing department that stimulate the incurrence of support costs.

The overhead rate may be computed once allocation from support service cost to producing department has been performed.

Which of the following methods allocates a joint cost such that each product has the same cost of goods sold percentage?

A company incurred $40,000 of common fixed costs and $60,000 of common variable costs. These costs are to be allocated to Departments A and B. Data on capacity provided and capacity used are as follows: Assume that common fixed costs are to be allocated to Departments A and B on the basis of capacity provided and that common variable costs are to be allocated to Departments A and B on the basis of capacity used. The fixed and variable costs allocated to Department A are

Impacto Corporation produces four products in a joint process for $650,000. The following information is available on total sales and production in units: What amount of joint costs will be allocated to I based on the physical units method?