Question :
8) Which of the following the most widely used method : 1186033
8) Which of the following is the most widely used method of allocating support department costs?
A) linear equation method
B) step-down method
C) hybrid method
D) reciprocal method
E) direct allocation method
Use the information below to answer the following question(s).
Joe’s Tire Company has two support departments, Personnel and Maintenance. The Maintenance Department costs of $80,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $20,000 are allocated based on the number of employees. Costs of Departments A and B are $40,000 and $60,000, respectively.
Data on standard service hours and number of employees are as follows:
Maintenance
Dept.
Personnel
Dept.
Production Dept. A
Production Dept. B
Standard service hours used
200
200
240
160
Number of employees
10
20
40
120
9) How much of the cost of the Maintenance Department is allocated to Department B using the direct method?
A) $60,000
B) $12,800
C) $32,000
D) $21,333
E) $5,333
10) How much of the cost of the Personnel Department is allocated to Department B using the direct method?
A) $8,000
B) $15,000
C) $13,333
D) $12,632
E) $48,000
11) How much of the cost of the Personnel Department is allocated to Department A using the direct method?
A) $5,000
B) $15,000
C) $13,333
D) $12,632
E) $48,000
12) What is the cost of the Maintenance Department allocated to Department B using the step-down method if the support department with the highest percentage of interdepartmental service to the other support department is allocated first?
A) $16,000
B) $21,333
C) $12,800
D) $32,471
E) $48,000
13) What is the cost of the Maintenance Department allocated to Department A using the step-down method if the Personnel Department is allocated first?
A) $8,000
B) $4,706
C) $5,000
D) $12,000
E) $14,118
14) Which method allocates costs by explicitly including the mutual services rendered among all support departments?
A) the direct allocation method
B) the interdepartmental method
C) the reciprocal allocation method
D) the step-down method
E) the incremental method
15) Which of the following describes the complete reciprocated cost?
A) It only includes the actual incurred cost of the operations department.
B) It only includes the actual incurred cost of the support department.
C) It is always larger than actual cost.
D) It is always less than actual cost.
E) It is equal to the actual cost of a single service department.
Use the information below to answer the following question(s).
John, owner of Hi-Tech Fiberglass Fabricators Inc. is interested in using the reciprocal allocation method. The following data from operations were collected for analysis.
Budgeted manufacturing overhead costs:
Plant Maintenance
PM (Support Dept.)
$350,000
Data Processing
DP (Support Dept.)
$75,000
Machining
M (Operating Dept.)
$225,000
Capping
C (Operating Dept.)
$125,000
Service furnished:
By Plant Maintenance (budgeted labour hours)
Data Processing
3,500
Machining
5,000
Capping
8,200
By Data Processing (budgeted computer time)
Plant Maintenance
600
Machining
3,500
Capping
600
16) Which of the following linear equations would represent the complete reciprocated cost of the Data Processing department?
A) DP = $75,000 + (600/4,700)PM
B) DP = $75,000 + (3,500/16,700)PM
C) DP = $75,000 × (600/4,800) + $350,000 × (3,340/16,700)
D) PM = $350,000 + (600/16,700)DP
E) PM =$75,000 × (600/4,700) + $350,000 × (3,340/16,700)
17) What is the complete reciprocated cost of the Data Processing and the Plant Maintenance, respectively?
A) $90,000 and $393,750
B) $118,750 and $365,000
C) $122,971 and $375,773
D) $152,432 and $375,773
E) $152,432 and $369,459
