Exam 7: Allocating Costs of Support Departments and Joint Products

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. What is the combined total department costs for the producing departments after allocation of the support departments?

Foster Company incurred $200,000 to manufacture the following products in a joint process: How much joint cost would be allocated to Product K based on the total sales value method?

Which of the following methods allocates joint production costs based on their proportionate share of eventual revenue less further processing costs?

Figure 7-2 Long Distance Company's travel department had the following budgeted costs for the coming year: Variable costs $34 per trip Fixed costs $143,360 The budgeted usage is given below: Yearly Trips Monthly Peak Trips West Sales Territory 110 trips 5 Midwest Sales Territory 170 trips 12 Southern Sales Territory 150 trips 15 Eastern Sales Territory 130 trips 8 The actual usage is given below: 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.

Examples of producing departments include all of the following EXCEPT

Products produced simultaneously by the same process up to a point are called __________ products.

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 sequential method, if the support department with the highest percentage of interdepartmental service is allocated first, the cost of the Maintenance Department allocated to Department P1 is

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 2 are

Producing departments create products and services to make and sell.

Figure 7-2 Long Distance Company's travel department had the following budgeted costs for the coming year: Variable costs $34 per trip Fixed costs $143,360 The budgeted usage is given below: Yearly Trips Monthly Peak Trips West Sales Territory 110 trips 5 Midwest Sales Territory 170 trips 12 Southern Sales Territory 150 trips 15 Eastern Sales Territory 130 trips 8 The actual usage is given below: 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 7-2 Long Distance Company's travel department had the following budgeted costs for the coming year: Variable costs $34 per trip Fixed costs $143,360 The budgeted usage is given below: Yearly Trips Monthly Peak Trips West Sales Territory 110 trips 5 Midwest Sales Territory 170 trips 12 Southern Sales Territory 150 trips 15 Eastern Sales Territory 130 trips 8 The actual usage is given below: 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, how much will be charged to the West Sales Territory?

The sales-value-at-split-off method allocates joint production costs based on each product's share of

Joint costs are allocated because of