Question 1

Product costs estimated using the sequential method of cost allocation

Accepted Answer

The sequential method of cost allocation involves choosing one service department and allocating its costs first, before proceeding to the next service department, unlike the reciprocal method which develops reciprocal cost equations to allocate costs among service departments.

Question 2

Under reciprocal cost allocation method:

Accepted Answer

The reciprocal cost allocation method involves developing reciprocal cost equations as the first step to account for the mutual services exchanged between service departments before allocating costs to the production departments.

Question 3

Why do product costing systems using the direct method,sequential method,and reciprocal method allocate service department overhead costs first to the production departments before assigning them to individual jobs?

Accepted Answer

The answer of Why do product costing systems using the...

Question 4

Long Island Manufacturing Company developed the following information for its service departments, S1 and S2, and its production departments, P1 and P2: 
-Using the direct method of service department cost allocation,how much is to be allocated from S2 to P2 if calculations are rounded to the nearest dollar?

Accepted Answer

C)$8,640 = $14,400 × 45/(30+45)

Question 5

Product costs estimated using the direct method of cost allocation

Accepted Answer

In the direct method of cost allocation, service department costs are allocated directly to the production departments. The other options are steps that come after the initial allocation of service department costs.

Question 6

Long Island Manufacturing Company developed the following information for its service departments, S1 and S2, and its production departments, P1 and P2: 
-Using the reciprocal method of service department cost allocation,how much is the total overhead cost for P1 for the period if calculations are rounded to the nearest dollar?

Accepted Answer

A)S1 = $8,000+ 0.25 [$14,400 + 0.30 (S1)]
S1 = $8,000 + $3,600 + 0.075 (S1)
S1 = $12,540 = $11,600 / 0.925
S2 = $18,162 = $14,400 + 0.30 ($12,540)
$25,210 = $16,000 + 0.30 ($12,540)+ 0.30 ($18,162)

Quiz 4: Accumulating and Assigning Costs to Products

Product costs estimated using the sequential method of cost allocation

Under reciprocal cost allocation method:

Why do product costing systems using the direct method,sequential method,and reciprocal method allocate service department overhead costs first to the production departments before assigning them to individual jobs?

Product costs estimated using the direct method of cost allocation