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Exam 19: Support Department and Joint Cost Allocation

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Question 41

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Before the split-off point, costs are not traced to the individual joint products because the costs are needed for both products.

A) True
B) False

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Question 42

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Match each description below to the appropriate step in the six-step process for allocating support department costs to production departments (a-f) Not all steps will be used. -Determine the percentage (proportional) usage of support department cost drivers by each department A)Step 1 B)Step 2 C)Step 3 D)Step 4 E)Step 5 F)Step 6

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Question 43

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Match each description below to the appropriate method for allocating costs (a-c). -Support department costs are simply combined with all other overhead costs and total overhead is applied using one cost driver. A)Single plantwide overhead rate B)Multiple production department rates C)Activity-based costing

The following list includes descriptions of the steps in the six-step process to allocate support department costs to production departments. Which of the following descriptions is incorrectly paired to the step number?

Using the direct method, Pone Hill Company allocates Janitorial Department costs based on square footage serviced. It allocates Cafeteria Department costs based on the number of employees served. It has the following information about its two service departments and two production departments, Cutting and Assembly: If the Janitorial Department incurs costs of $200,000, how much of that cost is allocated to the Cutting Department?

The following scenarios are encountered by Cooper Industries in several production facilities around the country. As the managerial accountant, you are asked to choose an appropriate support department cost allocation method. Indicate whether the scenario warrants the use of a single plantwide rate, multiple production department rates, or activity-based costing. Use each method only once.a.Single plantwide rate b.Multiple production department rates c.Activity-based costing -Scenario 2: Cooper Industries has a plant in New York that has 50 support departments that perform several specialized support activities within each. It has 79 production departments that create very complex products in a multistep process that require many production hours. This plant employs 15,000 people in the production facility and 4,000 people in support roles. It has three 8-hour shifts running six days a week all year round.

The process for allocating support activity costs with activity-based costing is similar to that used with a single plantwide rate.

After the split-off point, new costs incurred are not traced to the individual joint products because the costs are needed for both products.

Which of the following methods allocates joint costs based on the potential market value at the point where the products will be separated to be processed further?

A support department provides a necessary service to produce a product.

Which of the following is not the type of work done in a support department?

Goods of low value that are produced from a joint production process are called waste.

Which of the following is not one of the methods used for applying overhead?

The point in the production process where joint products become separable is called the

Which of the following is not one of the four common methods for allocating joint costs?

Which of the following is the main feature of support department costs?

Using the reciprocal services method, which of the following equations represents the correct algebraic expression to determine Janitorial Department costs when the total costs of the Janitorial Department (J) include not only $500,000 of direct costs but also 25% of the Maintenance Department (M) cost and the Maintenance Department includes not only $450,000 of direct costs but also 30% of the Janitorial Department? (Hint: This equation is derived from the two separate equations representing each department's costs.)

It is more accurate to ignore support department costs when determining product costs.

Departmental information for the four departments at Samoa Industries is provided below.​ The Janitorial and Cafeteria departments are support departments. Samoa uses the sequential method to allocate support department costs, first allocating the costs from the Janitorial Department to the Cafeteria, Cutting, and Assembly departments. Determine the proportional (percentage) usage of the Janitorial Department by the (a) Cafeteria, (b) Cutting, and (c) Assembly departments.

Departmental information for the four departments at Samoa Industries is provided below.​ The Janitorial and Cafeteria departments are support departments. Determine the proportional (percentage) usage of the Cafeteria Department by the (a) Cutting and (b) Assembly departments using the direct method.