Question 1

Useful Tool Company
Useful Tool Company has two service departments (General Factory and Repair)and two operating departments (Fabrication and Assembly).Management has decided to allocate repair costs on the basis of the area (square feet)in each department and to allocate General Factory on the basis of labor hours worked by the employees in each of their respective departments.
The following data appear in the company records for the current period:
  
The company allocates the costs from the General Factory Department first.
Refer to the Useful Tool Company.Using the step method,what is the total amount of costs allocated to (a)the Fabrication Department and (b)the Assembly Department?

Accepted Answer

The answer of Useful Tool Company
Useful Tool Company has two...

Question 2

Why are service department costs allocated to producing departments?

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Question 3

Which of the following is the method of allocating joint costs based on a physical measure of volume,weight,or any other common measure of physical characteristics?
A)absolute quantities method.
B)physical qualities method.
C)physical quantities method.
D)absolute qualities method.

Accepted Answer

The method of allocating joint costs based on a physical measure of volume, weight, or any other common measure of physical characteristics is known as the physical quantities method. Therefore, option C is the correct choice. The other options, such as absolute quantities method and absolute qualities method, are not valid methods of allocating joint costs.

Question 4

How are marketing and administrative costs allocated to departments for purposes of performance evaluation?

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Question 5

How are joint-process costs allocated?

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Question 6

Manufacturing companies are required to allocate joint-process costs in the valuation of inventories and cost of goods sold for
A)financial reporting,only.
B)tax reporting,only.
C)managerial reporting,only.
D)both financial and tax reporting.

Accepted Answer

Manufacturing companies are required to allocate joint-process costs in the valuation of inventories and cost of goods sold for both financial reporting and tax reporting. It is necessary to accurately reflect the costs incurred during the production process and to comply with accounting and tax regulations. Additionally, managerial reporting may also benefit from this information for decision-making purposes.

Question 7

Why are joint-process costs allocated?

Accepted Answer

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Question 8

Describe the factors that should be considered in allocating service department costs.

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Question 9

Useful Tool Company
Useful Tool Company has two service departments (General Factory and Repair)and two operating departments (Fabrication and Assembly).Management has decided to allocate repair costs on the basis of the area (square feet)in each department and to allocate General Factory on the basis of labor hours worked by the employees in each of their respective departments.
The following data appear in the company records for the current period:
  
The company allocates the costs from the General Factory Department first.
Refer to the Useful Tool Company.Using the direct method,what is the total amount of costs allocated to (a)the Fabrication Department and (b)the Assembly Department?

Accepted Answer

The answer of Useful Tool Company
Useful Tool Company has two...

Question 10

Useful Tool Company
Useful Tool Company has two service departments (General Factory and Repair)and two operating departments (Fabrication and Assembly).Management has decided to allocate repair costs on the basis of the area (square feet)in each department and to allocate General Factory on the basis of labor hours worked by the employees in each of their respective departments.
The following data appear in the company records for the current period:
  
The company allocates the costs from the General Factory Department first.
Refer to the Useful Tool Company.Using machine hours as the base and the step method of allocation,what is the overhead rate for the Fabrication Department?

Accepted Answer

The answer of Useful Tool Company
Useful Tool Company has two...

Question 11

Why bother allocating joint-process costs?
A)It is a performance measurement.
B)It is used in resolving contractual disputes.
C)It is used for estimating casualty losses
D)All of the answers are correct.

Accepted Answer

Joint-process costs allocation is necessary for various reasons like performance measurement, resolving contractual disputes, and estimating casualty losses. So, all the given answers are correct.

Question 12

The method of allocating joint costs used when output product prices are highly volatile or when significant processing occurs between the splitoff point and the first point of marketability is called the
A)absolute quantities method.
B)physical qualities method.
C)physical quantities method.
D)absolute qualities method.

Accepted Answer

The physical quantities method is appropriate when output prices are highly volatile because it allocates joint costs according to the physical quantities produced, rather than assigning values based on uncertain prices. This method is also suitable when significant processing occurs between the splitoff point and the first point of marketability, as it is based on measurable physical quantities rather than subjective quality assessments.

Question 13

The method of allocating joint costs used when product prices are not set by the market (for example with heavily regulated companies)is called the
A)absolute quantities method.
B)physical qualities method.
C)physical quantities method.
D)regulation method.

Accepted Answer

The method of allocating joint costs based on physical quantities is used when product prices are not set by the market. This method allocates joint costs to each joint product using their relative physical quantities. This is an appropriate method for heavily regulated companies where prices are not determined by the market forces.

Question 14

How is activity-based costing used to allocate service department costs?

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Question 15

Waterbury Box Company
General Factory Administration and Maintenance are service departments in the Waterbury Box Company.Management has decided to allocate maintenance costs on the basis of the area in each department and general factory administration costs on the basis of labor hours the employees worked in each of their respective departments.
The following data appears in the company records for the current period:
  
Refer to the Waterbury Box Company.Use the direct method to allocate service department costs to the operating departments.

Accepted Answer

The answer of Waterbury Box Company
General Factory Administration and Maintenance...

Question 16

Waterbury Box Company
General Factory Administration and Maintenance are service departments in the Waterbury Box Company.Management has decided to allocate maintenance costs on the basis of the area in each department and general factory administration costs on the basis of labor hours the employees worked in each of their respective departments.
The following data appears in the company records for the current period:
  
Refer to the Waterbury Box Company.What are the total service department costs allocated using each method?

Accepted Answer

The answer of Waterbury Box Company
General Factory Administration and Maintenance...

Question 17

A method for allocating joint-process costs is based on
A)opportunity costs.
B)outlay costs.
C)indirect costs.
D)physical measures.

Accepted Answer

A method for allocating joint-process costs based on physical measures measures the amount or quantity of output produced from each joint process. This method is suitable for products that have a measurable unit of output, such as gallons of gasoline produced or pounds of meat butchered. It is more objective and practical than using subjective measures such as opportunity costs or indirect costs. Outlay costs are not a suitable basis for allocating joint-process costs as they do not reflect the actual resource usage involved in the joint process.

Question 18

Big Farms LLC has two production departments (Planting and Harvesting)and two service departments (Cafeteria and Repairs. )The service department's costs must be allocated to production departments.Management has decided to allocate the cost of the cafeteria to other departments based upon the average number of employees and the cost of the Repairs Department based upon the number of machine hours used.
  
Regardless of the allocation method used,Big Farm always starts the allocation process with the Cafeteria Department.
If Big Farm uses the step method,what additional overhead costs should be allocated from the service departments to the Planting Department?

Accepted Answer

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Question 19

Useful Tool Company
Useful Tool Company has two service departments (General Factory and Repair)and two operating departments (Fabrication and Assembly).Management has decided to allocate repair costs on the basis of the area (square feet)in each department and to allocate General Factory on the basis of labor hours worked by the employees in each of their respective departments.
The following data appear in the company records for the current period:
  
The company allocates the costs from the General Factory Department first.
Refer to the Useful Tool Company.Using direct labor hours as the base and the direct method of allocation,what is the overhead rate for the Assembly Department?

Accepted Answer

The answer of Useful Tool Company
Useful Tool Company has two...

Question 20

Waterbury Box Company
General Factory Administration and Maintenance are service departments in the Waterbury Box Company.Management has decided to allocate maintenance costs on the basis of the area in each department and general factory administration costs on the basis of labor hours the employees worked in each of their respective departments.
The following data appears in the company records for the current period:
  
Refer to the Waterbury Box Company.Use the step method to allocate service department costs to the operating departments,starting with general factory administration.

Accepted Answer

The answer of Waterbury Box Company
General Factory Administration and Maintenance...

Quiz 13: Allocating Costs to Responsibility Centers

Why are service department costs allocated to producing departments?

Which of the following is the method of allocating joint costs based on a physical measure of volume,weight,or any other common measure of physical characteristics?

How are marketing and administrative costs allocated to departments for purposes of performance evaluation?

How are joint-process costs allocated?

Manufacturing companies are required to allocate joint-process costs in the valuation of inventories and cost of goods sold for

Why are joint-process costs allocated?

Describe the factors that should be considered in allocating service department costs.

Why bother allocating joint-process costs?

The method of allocating joint costs used when output product prices are highly volatile or when significant processing occurs between the splitoff point and the first point of marketability is called the

The method of allocating joint costs used when product prices are not set by the market (for example with heavily regulated companies) is called the

How is activity-based costing used to allocate service department costs?

A method for allocating joint-process costs is based on