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79) A granary allocates the cost of unprocessed wheat to the production of feed, flour, and starch. For the
current period, unprocessed wheat was purchased for $120,000, and the following quantities of
product and sales revenues were produced.
Product
Feed
Pounds
100,000
Price per Pound
$ 0.70
Flour
50,000
2.20
Starch
20,000
1.00
How much of the $120,000 cost should be allocated to feed if the value basis is used?
A) $ 70,000. B) $ 45,000. C) $ 100,000. D) $ 42,000. E) $ 12,250.
80) A granary allocates the cost of unprocessed wheat to the production of feed, flour, and starch. For the
current period, unprocessed wheat was purchased for $120,000, and the following quantities of
product and sales revenues were produced.
Product
Feed
Pounds
100,000
Price per Pound
$ 0.70
Flour
50,000
2.20
Starch
20,000
1.00
How much of the $120,000 cost should be allocated to flour if the value basis is used?
A) $70,000.
B) $66,000.
C) $84,000.
D) $24,500.
E) $200,000.
81) Wren Pork Company uses the value basis of allocating joint costs in its production of pork products.
Relevant information for the current period follows:
Product
Loin chops
Pounds
3,000
Price/lb.
$ 5.00
Ground
10,000
2.00
Ribs
4,000
4.75
Bacon
6,000
3.50
The total joint cost for the current period was $43,000. How much of this cost should Wren Pork
allocate to Loin chops?
A) $10,750. B) $0. C) $8,600. D) $43,000. E) $5,909.
82) Calculating return on investment for an investment center is defined by the following formula:
A) Income/Average invested assets.
B) Net income/Ending assets.
C) Contribution margin/Average invested assets.
D) Contribution margin/Ending assets.
E) Gross profit/Ending assets.
83) Investment center managers are usually evaluated using performance measures
A) that combine assets and capital.
B) based on income only.
C) that combine income and capital.
D) based on assets only.
E) that combine income and assets.
Investment
Center A
Investment center income
$ 415,000
$
Investment center average invested assets
$ 2,400,000
$
84) Two investment centers at Marshman Corporation have the following current-year income and asset
data:
Investment
Center B
525,000
1,950,000
The return on investment (ROI) for Investment Center A is:
A) 24.1% B) 19.1% C) 39.2% D) 17.3% E) 578.3%
Investment
Center A
Investment center income
$ 415,000
$
Investment center average invested assets
$ 2,400,000
$
85) Two investment centers at Marshman Corporation have the following current-year income and asset
data:
Investment
Center B
525,000
1,950,000
The return on investment (ROI) for Investment Center B is:
A) 26.9% B) 371.4% C) 21.7% D) 39.2% E) 24.1%
86) A retail store has three departments, S, T, and U, and does general advertising that benefits all
departments. Advertising expense totaled $50,000 for the year, and departmental sales were as
follows. Allocate advertising expense to Department T based on departmental sales.
Department S
$ 110,000
Department T
213,750
Department U
151,250
Total
$ 475,000
A) $14,000. B) $22,500. C) $11,000. D) $16,667. E) $50,000.
87) Riemer, Inc. has four departments. Information about these departments is listed below. Maintenance
is a service department. If allocated maintenance cost is based on floor space occupied by each of the
other departments, compute the amount of maintenance cost allocated to the Cutting Department.
Maintenance
Cutting
Assembly
Packaging
Direct costs
$ 18,000
$ 30,000
$ 70,000
$ 45,000
Sq. ft. of space
500
1,500
2,000
2,500
No. of employees
2
3
16
4
A) $6,000. B) $4,153. C) $4,500. D) $500. E) $3,724.
51
88) CakeCo, Inc. has three operating departments. Information about these departments is listed below.
Maintenance is service department at CakeCo that incurred $12,000 of costs during the period. If
allocated maintenance cost is based on floor space occupied by each of the operating departments,
compute the amount of maintenance cost allocated to the Baking Department.
Mixing Baking Packaging
Direct costs $ 21,00 $ 15,00 $ 9,00
Direct costs $ 21,00
0 $ 15,00
0 $ 9,00
0
Sq. ft. of space 1,000 1,500 500
A) $400. B) $6,000. C) $7,500. D) $1,200. E) $4,000.
89) Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three
categories of office expenses are allocated to the two departments using different allocation bases.
The following information is available for the current period:
Office Expenses
Salaries
Total
$ 30,000
Allocation Basis
Number of employees
Depreciation
20,000
Cost of goods sold
Advertising
40,000
Net sales
Item
Number of employees
Drilling
1,000
Grinding
1,500
Total
2,500
Net sales
$ 325,000
$ 475,000
$ 800,000
Cost of goods sold
$ 75,000
$ 125,000
$ 200,000
The amount of the total office expenses that should be allocated to Grinding for the current period is:
A) $45,000. B) $54,250. C) $600,000. D) $35,750. E) $90,000.
55
90) Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three
categories of office expenses are allocated to the two departments using different allocation bases.
The following information is available for the current period:
Office Expenses Total Allocation Basis
Salaries $ 30,00
0
Depreciation 20,00
0
Advertising 40,00
0
Number of employees
Cost of goods sold
Net sales
56
Item
Drilling
Grinding
Total
Number of employees
1,000
1,500
2,500
Net sales
$ 325,000
$ 475,000
$ 800,000
Cost of goods sold
$ 75,000
$ 125,000
$ 200,000
The amount of salaries that should be allocated to Grinding for the current period is:
A) $30,000. B) $10,000. C) $12,500. D) $15,000. E) $18,000.
91) Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three
categories of office expenses are allocated to the two departments using different allocation bases.
The following information is available for the current period:
Office Expenses Total Allocation Basis
Salaries $ 30,00
0
Depreciation 20,00
0
Advertising 40,00
0
Number of employees
Cost of goods sold
Net sales
Item
Drilling Grinding Total
57
Number of employees
1,000
1,500
2,500
Net sales
$ 325,000
$ 475,000
$ 800,000
Cost of goods sold
$ 75,000
$ 125,000
$ 200,000
The amount of depreciation that should be allocated to Grinding for the current period is:
A) $25,000. B) $40,000. C) $7,500. D) $12,500. E) $20,000.
92) Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three
categories of office expenses are allocated to the two departments using different allocation bases.
The following information is available for the current period:
Office Expenses
Salaries
Total
$ 30,000
Allocation Basis
Number of employees
Depreciation
20,000
Cost of goods sold
Advertising
40,000
Net sales
Item
Number of employees
Drilling
1,000
Grinding
1,500
Total
2,500
Net sales
$ 325,000
$ 475,000
$ 800,000
Cost of goods sold
$ 75,000
$ 125,000
$ 200,000
58
The amount of the advertising cost that should be allocated to Grinding for the current period is:
A) $45,000. B) $16,250. C) $325,000. D) $54,250. E) $23,750.
93) Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three
categories of office expenses are allocated to the two departments using different allocation bases.
The following information is available for the current period:
Office Expenses Total Allocation Basis
Salaries $ 30,00
0
Depreciation 20,00
0
Advertising 40,00
0
Number of employees
Cost of goods sold
Net sales
Item
Drilling
Grinding
Total
Number of employees
1,000
1,500
2,500
Net sales
$ 325,000
$ 475,000
$ 800,000
Cost of goods sold
$ 75,000
$ 125,000
$ 200,000
The amount of the total office expenses that should be allocated to Drilling for the current period is:
A) $ 35,750. B) $ 90,000. C) $600,000. D) $ 54,250. E) $ 45,000.
60
94) Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three
categories of office expenses are allocated to the two departments using different allocation bases.
The following information is available for the current period:
Office Expenses
Salaries
Total
$ 30,000
Allocation Basis
Number of employees
Depreciation
20,000
Cost of goods sold
Advertising
40,000
Net sales
Item
Number of employees
Drilling
1,000
Grinding
1,500
Total
2,500
Net sales
$ 325,000
$ 475,000
$ 800,000
Cost of goods sold
$ 75,000
$ 125,000
$ 200,000
The amount of salaries that should be allocated to Drilling for the current period is:
