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Exam 19: Support Department and Joint Cost Allocation

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Question 71

Multiple Choice

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Johnson Lumber Mill produces various grades of cut boards from raw lumber. The costs incurred once the cut boards are separated and processed further are

A) investment center costs
B) joint costs that cannot be separated
C) new costs that can be traced to the various grades of lumber being produced
D) new costs that cannot be traced to the various grades of lumber being produced

E) A) and C)
F) None of the above

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Question 72

Multiple Choice

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McBride's Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. It also incorporates a processing time weight factor of 1 for the cream and 3 for the skimmed milk. The amount of this cost that will be allocated to skimmed milk using the weighted average method is

A) $1,000
B) $900
C) $100
D) $750

E) B) and D)
F) A) and B)

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Question 73

Multiple Choice

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Which of the following statements is true about the sequential method of allocating support department costs to production departments?

The Maintenance Department that services machines used in the production process is an example of a support department.

Which of the following is the correct order for allocating overhead costs using activity-based costing?

Which of the following statements is true about joint manufacturing processes?

McBride's Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. The amount of this cost that will be allocated to skimmed milk using the physical units method is

McBride's Dairy has 200 gallons of heavy cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. It can sell each product at the split-off point or process it further in relatively similar processes, so management has decided that the most appropriate method for allocating joint costs is the market value at split-off point. One gallon of cream sells for $15, while one gallon of milk sells for $4. How much of the joint cost is allocated to cream? Round percentage calculations to the nearest whole percent.

When multiple production department rates are used to apply overhead to products,

Departmental information for the four departments at Samoa Industries is provided below.​ The Janitorial and Cafeteria departments are support departments. Determine the dollar amount of the Janitorial Department costs to be allocated to the (a) Cutting and (b) Assembly departments using the direct method.

The following scenarios are encountered by Lillie Manufacturing Company in its many 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: Lillie Manufacturing has a plant in Minnesota that has five support departments that all have several activities performed within the departments. It has seven production departments that build very complex multistep products that require many production activities. This plant employs 5,000 people in the production facility and has three 8-hour shifts running six days a week.

The reciprocal services method of allocating support department costs to production using the ABC method is the most difficult and most accurate method.

The direct, sequential, and reciprocal services methods of allocating support department costs to production departments using ABC require a six-step process.

Under the sequential method of allocating support department costs to production departments using ABC, support department costs are allocated back to support departments from which costs have already been allocated.

Jamison Company uses the reciprocal services method to allocate support department costs and has gathered the following information: What is the total Janitorial Department cost using the reciprocal services method?

Scotland Beauty Products manufactures face cream, body lotion, and liquid soap in a joint manufacturing process. At the split-off point, the company has 300 pounds of face cream, 200 pounds of body lotion, and 300 pounds of liquid soap and has incurred $200,000 in joint costs.Using the weighted average method, allocate the joint costs to (a) face cream with a weight factor of 1, (b) body lotion with a weight factor of 3, and (c) liquid soap with a weight factor of 1.

Under the reciprocal services method of allocating support department costs to production departments using ABC, all inter-support-department services are considered in the allocation process.

In activity-based costing, support department costs are referred to as support activity costs.

When a single manufacturing process generates multiple outputs, it is called a(n)

An example of the split-off point in oil, gasoline, and kerosene production is that point where crude oil is