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Exam 19: Support Department and Joint Cost Allocation

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Question 91

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Under the market value at split-off method, if a product is sold at the split-off point, its

A) estimated sales price is used
B) actual sales prices is used
C) prior year sales price is used
D) weighted average sales price is used

E) A) and B)
F) A) and C)

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Question 92

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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 with a market value of $15 per pound, 200 pounds of body lotion with a market value of $13 per pound, and 300 pounds of liquid soap with a market value of $7 per pound and has incurred $200,000 in joint costs. The net realizable value (NRV) of the face cream is $7,500, the NRV of the body lotion is $3,500, and the NRV of the liquid soap is $4,000.Using the net realizable value method, allocate the joint costs to (a) face cream, (b) body lotion, and (c) liquid soap. Round percentages in intermediate steps to the nearest whole percentage.

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a.face cream: [$7,500 ÷ ($7,500 + $3,500...

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Question 93

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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 dollar amount of the Janitorial Department costs to be allocated to the (a) Cafeteria, (b) Cutting, and (c) Assembly departments.

Which of the following statements is false regarding the six-step process as it is utilized in the reciprocal services method?

You are a manager at McBride's Dairy where whey is a by-product of the production process. Thinking about the utility and usefulness of by-products in a joint production process, you may decide to take several courses of action. Which of the following actions would you not recommend?

Which of the following describes how support department costs are related to production?

Using the reciprocal services method, which of the following equations represents the algebraic expressions for the two equations needed to capture the total costs of a Janitorial Department (J) that includes not only $500,000 of direct costs but also 25% of the Maintenance Department (M) cost and the Maintenance Department that includes not only $450,000 of direct costs but also 30% of the Janitorial Department?

Which of the following methods allocates joint costs based on physical units that are weighted and then multiplied by actual physical units?

Which of the following is the easiest but least accurate of the commonly used methods for allocating support department costs to production departments?

Using the performance report for Scotland Beauty Products (including support department and joint cost allocations), evaluate the performance of Becky Borger. What two important items stand out regarding the performance of her department?

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 3: Lillie Manufacturing has a plant in Florida that has two support departments that both have limited activities performed by the departments. It has three production departments that build two simple products. This plant employs 100 people in the production facility and has two 8-hour shifts running five days a week.

Which of the following terms is commonly used to describe the departments within a company that provide a necessary service to produce a product but are not directly involved in production?