75. Barstow Manufacturing Company has two service departments — product design and
engineering support, and two production departments — assembly and finishing. The distribution
of each service department’s efforts to the other departments is shown below:
FROM TO
Design Support Assembly Finishing
Design 0% 10% 30% 60%
Support 20% 0% 45% 35%
The direct operating costs of the departments (including both variable and fixed costs) were as
follows:
Design $140,000
Engineering Support $160,000
Assembly $550,000
Finishing $840,000
The total cost accumulated in the assembly department using the direct method is (calculate all
ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts
to the nearest whole dollar):
76. Barstow Manufacturing Company has two service departments — product design and
engineering support, and two production departments — assembly and finishing. The distribution
of each service department’s efforts to the other departments is shown below:
FROM TO
Design Support Assembly Finishing
Design 0% 10% 30% 60%
Support 20% 0% 45% 35%
The direct operating costs of the departments (including both variable and fixed costs) were as
follows:
Design $140,000
Engineering Support $160,000
Assembly $550,000
Finishing $840,000
The total cost accumulated in the finishing department using the direct method is (calculate all
ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts
to the nearest whole dollar):
77. Barstow Manufacturing Company has two service departments — product design and
engineering support, and two production departments — assembly and finishing. The distribution
of each service department’s efforts to the other departments is shown below:
FROM TO
Design Support Assembly Finishing
Design 0% 10% 30% 60%
Support 20% 0% 45% 35%
The direct operating costs of the departments (including both variable and fixed costs) were as
follows:
Design $140,000
Engineering Support $160,000
Assembly $550,000
Finishing $840,000
The total cost accumulated in the assembly department using the step method is (calculate all
ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts
to the nearest whole dollar; assume that the design department goes first):
78. Barstow Manufacturing Company has two service departments — product design and
engineering support, and two production departments — assembly and finishing. The distribution
of each service department’s efforts to the other departments is shown below:
FROM TO
Design Support Assembly Finishing
Design 0% 10% 30% 60%
Support 20% 0% 45% 35%
The direct operating costs of the departments (including both variable and fixed costs) were as
follows:
Design $140,000
Engineering Support $160,000
Assembly $550,000
Finishing $840,000
The total cost accumulated in the finishing department using the step method is (calculate all
ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts
to the nearest whole dollar; assume that the design department goes first):
79. Barstow Manufacturing Company has two service departments — product design and
engineering support, and two production departments — assembly and finishing. The distribution
of each service department’s efforts to the other departments is shown below:
FROM TO
Design Support Assembly Finishing
Design 0% 10% 30% 60%
Support 20% 0% 45% 35%
The direct operating costs of the departments (including both variable and fixed costs) were as
follows:
Design $140,000
Engineering Support $160,000
Assembly $550,000
Finishing $840,000
The total cost accumulated in the assembly department using the reciprocal method is
(calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all
dollar amounts to the nearest whole dollar):
80. Barstow Manufacturing Company has two service departments — product design and
engineering support, and two production departments — assembly and finishing. The distribution
of each service department’s efforts to the other departments is shown below:
FROM TO
Design Support Assembly Finishing
Design 0% 10% 30% 60%
Support 20% 0% 45% 35%
The direct operating costs of the departments (including both variable and fixed costs) were as
follows:
Design $140,000
Engineering Support $160,000
Assembly $550,000
Finishing $840,000
The total cost accumulated in the finishing department using the reciprocal method is(calculate
all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar
amounts to the nearest whole dollar):
81. Which of the following is not a phase of the departmental approach?
82. The direct method of departmental cost allocation is the simplest of the three methods
because it:
83. When significant differences exist in costs allocated to production departments, cost
management should use what method to find a more accurate cost allocation?
84. Which of the following is not a “production” department in a service firm?
85. Joint products are products that:
86. The point in a joint production process at which individual products can be identified for
the first time is called the:
87. Firm X has a production process that has a total joint cost of $15,000. At the split–off
point, there are 2,000 pounds of Product 1 and 3,000 pounds of Product 2. What is the cost per
pound of Product 1 using the physical measure method?
88. Which of the following is an advantage of the sales value at split-off method?
89. Beth Johnson was recently appointed Vice President of Administration in the Sigma
Group, a nationwide personal financial planning services firm. Ann Garber, department manager,
has just finished reading the most recent memo from VP Johnson, which reads in part:
In order to more efficiently apportion the costs of hard copy duplication, departments will be
charged $0.075 per page for all duplicated materials. This new rate replaces the two-tier rate
structures of $0.05 and $0.10 per page, and is effective as of the date of this memo. The two tier
system was used to charge a higher rate for the more difficult jobs.
“What is she trying to do?” Ann asks. “This new price will drive up my department’s duplicating
costs so much that we’ll have to cut back on how much stuff we have duplicated.”
Required:
a. What is the control advantage of any multi-tier pricing (costing) system versus a single price
(cost) system?
b. If the new price for duplication reduces total usage of duplicating services, are there any
significant disadvantages to such a reduction in usage?
90. “What’s the big fuss about learning three different methods of cost allocation for joint
products? The total cost doesn’t change, and the real question that needs answering is whether
to further process joint products or sell right away. Besides, our firm uses JIT inventory, so there
aren’t any ending inventories to cost.”
Required:
Comment on these ideas.
91. The Chapman Manufacturing Company has two service departments — manufacturing
support and facilities management, and two production departments — assembly and
packing/shipping. The distribution of each service department’s efforts to the other departments
is shown below:
FROM TO
Support Facilities Assembly Pack/Ship
Support 0% 45% 25% 30%
Facilities 30% 0% 30% 40%
The direct operating costs of the departments (including both variable and fixed costs) were as
follows:
Manufacturing Support $240,000
Facilities Management 450,000
Assembly 1,200,000
Pack/Ship 225,000
Required:
(Calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all
dollar amounts to the nearest whole dollar.):
(1) Allocate the service department costs to the production departments using the direct
method.
(2) Allocate the service department costs to the production departments using the step method
with the support department going first.
(3) Allocate the service department costs to the production departments using the reciprocal
method.