38. Which of the following statements is false?
39. Net realizable value at the split-off point is used to allocate:
40. Which of the following is not a physical measure that can be used for allocating joint costs
using the physical quantities method?
41. Product C is one of several joint products that come out of Department M. The joint costs
incurred in Department M total $40,000. Product C can be sold at split-off or processed further
and sold as a higher quality item. The decision to process further should be based on the:
42. The characteristic that is most often used to distinguish a product as either a main
product or a by-product is the amount of:
43. Products with a relatively minor sales value are called:
44. Bagley Company has two service departments and two producing departments. Square
footage of space occupied by each department follows:
The department costs of Custodial Services are allocated on a basis of square footage of space. If
Custodial Services costs are budgeted at $38,000, the amount of cost allocated to General
Administration under the direct method would be:
45. Castle Company has two service departments and two producing departments. The
number of employees in each department is:
The department costs of the Personnel Department are allocated on a basis of the number of
employees. If these costs are budgeted at $37,125 during a given period, the amount of cost
allocated to Department B under the direct method would be:
46. Cincinnati Million, Inc. operates two user divisions as separate cost objects. To determine
the costs of each division, the company allocates common costs to the divisions. During the past
month, the following common costs were incurred:
The following information is available concerning various activity measures and service usages by
each of the divisions:
If common computer service costs are allocated using computer time as the allocation basis, what
is the computer cost allocated to Division B?
47. Cincinnati Million, Inc. operates two user divisions as separate cost objects. To determine
the costs of each division, the company allocates common costs to the divisions. During the past
month, the following common costs were incurred:
The following information is available concerning various activity measures and service usages by
each of the divisions:
Using the most appropriate allocation basis, what is the personnel cost allocated to Division A?
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48. Cincinnati Million, Inc. operates two user divisions as separate cost objects. To determine
the costs of each division, the company allocates common costs to the divisions. During the past
month, the following common costs were incurred:
The following information is available concerning various activity measures and service usages by
each of the divisions:
If all common costs are allocated using operating profit as the allocation basis, what is the total
cost allocated to Division B?
49. Castle Company has two service departments and two user departments. The number of
employees in each department is:
The fixed costs of the Personnel Department are allocated on a basis of the number of
employees. If these costs are budgeted at $37,125 during a given period, the amount of cost
allocated to the Cafeteria under the step method would be:
50. The Emery Construction Company occupies 85,000 square feet for construction of mobile
homes. There are two manufacturing departments, finishing and assembly, and four service
departments labeled S1, S2, S3, and S4. Information relevant to Emery is as follows:
Rent paid for the area used is $720,000.
How much rent is allocable to the assembly department using the direct method of allocation?
51. The Emery Construction Company occupies 85,000 square feet for construction of mobile
homes. There are two manufacturing departments, finishing and assembly, and four service
departments labeled S1, S2, S3, and S4. Information relevant to Emery is as follows:
Rent paid for the area used is $720,000.
How much rent would be charged to S4 using the step method of allocation and a S3–S4–S1–S2
sequence for the allocations?
52. Computer Complex, Inc. has two main services: (1) time on a timeshared computer
system, and (2) proprietary computer programs. Computer time is provided by the operation
department (Op) and programs are written by the programming department (P)
The percentage of each service used by each department for a typical period is:
In a typical period, the operation department (Op) spends $4,500 and the programming
department (P) spends $2,500.
Under the step method (Op first), what is the cost of the computer time and the computer
programs for sale?
53. Computer Complex, Inc. has two main services: (1) time on a timeshared computer
system, and (2) proprietary computer programs. Computer time is provided by the operation
department (Op) and programs are written by the programming department (P)
The percentage of each service used by each department for a typical period is:
In a typical period, the operation department (Op) spends $4,500 and the programming
department (P) spends $2,500.
Under the reciprocal method what is the algebraic solution to the cost allocation problem?
54. The RAH Manufacturing Company has two service departments: Maintenance and
Accounting. The Maintenance Department’s costs of $300,000 are allocated on the basis of
machine hours. The Accounting Department’s costs of $120,000 are allocated on the basis of the
number of employees within a specific department. The direct departmental costs for A and B are
$300,000 and $500,000, respectively.
What is the Maintenance Department’s cost allocated to Department A using the direct method?
55. The RAH Manufacturing Company has two service departments: Maintenance and
Accounting. The Maintenance Department’s costs of $300,000 are allocated on the basis of
machine hours. The Accounting Department’s costs of $120,000 are allocated on the basis of the
number of employees within a specific department. The direct departmental costs for A and B are
$300,000 and $500,000, respectively.
What is the Accounting Department’s cost allocated to Department B using the direct method?
56. The RAH Manufacturing Company has two service departments: Maintenance and
Accounting. The Maintenance Department’s costs of $300,000 are allocated on the basis of
machine hours. The Accounting Department’s costs of $120,000 are allocated on the basis of the
number of employees within a specific department. The direct departmental costs for A and B are
$300,000 and $500,000, respectively.
What is the Maintenance Department’s cost allocated to Department B using the step method and
assuming the Maintenance Department’s costs are allocated first?
57. The RAH Manufacturing Company has two service departments: Maintenance and
Accounting. The Maintenance Department’s costs of $300,000 are allocated on the basis of
machine hours. The Accounting Department’s costs of $120,000 are allocated on the basis of the
number of employees within a specific department. The direct departmental costs for A and B are
$300,000 and $500,000, respectively.
What is the cost of the Accounting Department’s cost allocated to Department A using the step
method and assuming the Maintenance Department’s costs are allocated first?
58. Harry Dishman owns and operates Harry’s Septic Service and Legal Advice. Harry’s two
revenue generating (production) operations are supported by two service departments: Clerical
and Janitorial. Costs in the service departments are allocated in the following order using the
designated allocation bases:
Clerical:
Variable cost: expected number of work orders processed
Fixed cost: long-run average number of work orders processed
Janitorial:
Variable cost: labor hours
Fixed cost: square footage of space occupied
Average and expected activity levels for next month (June) are as follows:
Expected costs in the service departments for June are as follows:
Under the step method of allocation, how much Clerical service cost should be allocated to the
Septic Service operation for June? (Assume Clerical costs are allocated before Janitorial costs and
round all calculations to the nearest whole dollar.)
59. Harry Dishman owns and operates Harry’s Septic Service and Legal Advice. Harry’s two
revenue generating (production) operations are supported by two service departments: Clerical
and Janitorial. Costs in the service departments are allocated in the following order using the
designated allocation bases:
Clerical:
Variable cost: expected number of work orders processed
Fixed cost: long-run average number of work orders processed
Janitorial:
Variable cost: labor hours
Fixed cost: square footage of space occupied
Average and expected activity levels for next month (June) are as follows:
Expected costs in the service departments for June are as follows:
Under the direct method of allocation, what is the total amount of service cost allocated to the
Legal Advice operation for June? (Round all calculations to the nearest whole dollar.)