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Exam 7: Allocating Costs of Support Departments and Joint Products

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Question 41

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Hunghi Company has three support departments whose direct department costs are $35,000, $45,000, and $55,000, respectively, and two producing departments whose direct department costs are $400,000 and $360,000, respectively. The combined total department cost for the producing departments after allocation of the support departments is

A) $360,000.
B) $760,000.
C) $895,000.
D) $135,000.

E) C) and D)
F) A) and B)

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Question 42

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Gravity Company has two support departments, Maintenance Department (MD) and Personnel Department (PD) , and two producing departments, P1 and P2. The Maintenance Department costs of $120,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $18,000 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $36,000 and $60,000, respectively. Data on standard service hours and number of employees are as follows: What are the total overhead costs associated with P1 after allocating the Maintenance and Personnel Departments using the direct method?

A) $120,000
B) $125,000
C) $36,000
D) $18,000

E) A) and D)
F) B) and C)

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Question 43

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Support department costs are accounted for in which one of the following ways?

Under the physical units method, joint costs are distributed to products on the basis of some physical measure.

Joint products are two or more products produced simultaneously by the same process.

Figure 7-1 Luxurious Department Store incurred $6,000 of indirect advertising costs for its operations. The following data has been collected for 2014 for its three departments: Refer to Figure 7-1. How much of the indirect advertising costs will be allocated to the Sportswear Department if newspaper ad space is the activity driver?

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 support departments allocated to Department P1 is

Howard Company has two support departments (S1 and S2) and two producing departments (P1 and P2) . Department S1 costs are allocated on the basis of number of employees, and Department S2 costs are allocated on the basis of space occupied expressed in square feet. Data on direct department costs, number of employees, and space occupied are as follows: If Howard used the reciprocal method, the algebraic equation expressing the total costs allocated from S1 is

Which of the following is NOT a benefit of the costs of support departments being allocated to production departments?

Suppose that a Plywood manufacturer processes wood pulp into four grades of Plywood totaling 500,000 board feet as follows at a joint cost of $450,000: What amount of joint costs will be allocated to No. 1 common using the final sales value method?

Examples of support departments include all of the following EXCEPT

Compare and contrast the various methods of accounting for joint product costs.

A common cost occurs

What is one of the potential disadvantages of NOT allocating support department costs to production departments?

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 Corporate Department used 190,000 pages, what would be the printing charges for the Corporate Department? (Round to the nearest cent.)

Algonquin Products produces two products, X and Y, in a single process. In 2011, the joint costs of this process were $25,000. In addition, 4,000 units of X and 6,000 units of Y were produced. Separable processing costs beyond the split-off point were: X-$10,000; Y-$20,000. X sells for $10.00 per unit; Y sells for $7.50 per unit. What amount of joint costs will be allocated to product X using the net realizable value net realizable value method?

Activities or variables within a producing department that provoke the incurrence of support costs are called __________ .

Diane's Pottery Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $30,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows: What are the total overhead costs associated with Department X after allocating the Maintenance and Personnel Departments using the direct method?

Ely Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $60,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $9,000 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $18,000 and $30,000, respectively. Data on standard service hours and number of employees are as follows: Predetermined overhead rates for Departments X and Y, respectively, are based on direct labor hours. What is the overhead rate for Department Y assuming the direct method is used?

Which of the following would generally be a by-product?