Which of the following explains why it is difficult to apply support department costs such as janitorial services to products quizlet?

Terms in this set (21)

Hera Inc. has four production departments: Molding, Cutting, Welding, and Polishing. The company incurred joints costs of $1,000,000 during the year. The allocation of the joint costs of production is done based on the net realizable value of the output. We are provided with the following details for Hera Inc.
ParticularsMoldingdepartmentCuttingdepartmentWeldingdepartmentPolishingdepartmentNet realizable value$1,500,000$1,700,000$1,000,000$800,000Cost targets$250,000$600,000$220,000$180,000
Which of the departments will experience the most adverse impact due to the allocation of joint costs?

Students also viewed

Recommended textbook solutions

Century 21 Accounting: General Journal

11th EditionClaudia Bienias Gilbertson, Debra Gentene, Mark W Lehman

1,012 solutions

Fundamentals of Financial Management, Concise Edition

10th EditionEugene F. Brigham, Joel Houston

777 solutions

Accounting: What the Numbers Mean

9th EditionDaniel F Viele, David H Marshall, Wayne W McManus

345 solutions

Financial Accounting

7th EditionDaniel G. Short, Patricia A. Libby, Robert Libby

1,043 solutions

Bought a chegg subscription just for this, lots of guesses. This was the best I could manage.

Terms in this set (41)

Adirondack Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead.
Overhead TotalDirectLabor Hours DLH per Product A B Painting Dept. $252,300 10,200 3 10 Finishing Dept. 79,600 10,600 3 8 Totals $331,900 20,800 6 18
Using a single plantwide rate, the factory overhead allocated per unit of Product A in the Painting Department is
a. $74.21 per unit
b. $593.65 per unit
c. $15.96 per unit
d. $47.88 per unit

Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below.
Product Number of Units Direct Labor HoursPer Unit Machine HoursPer Unit Blinks 1,184 4 5 Dinks 2,283 8 7
All of the machine hours take place in the Fabrication department, which has an estimated overhead of $116,300. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $94,600.
Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs. The single plantwide rate, if it is based on machine hours instead of labor hours, is
a. $12.04 per machine hour
b. $9.63 per machine hour
c. $7.70 per machine hour
d. $22.15 per machine hour

Blackwelder Factory produces two similar products: small table lamps and desk lamps. The total factory overhead budget is $588,000 with 527,000 estimated direct labor hours. It is further estimated that small table lamp production will require 263,000 direct labor hours, and desk lamp production will need 125,000 direct labor hours.
Using a single plantwide factory overhead rate with an allocation base of direct labor hours, the factory overhead that Blackwelder Factory will allocate to small table lamp production if actual direct labor hours for the period for small table lamp production is 236,000 would be
a. $525,636
b. $264,320
c. $655,271
d. $585,773

Blackwelder Factory produces two similar products: small table lamps and desk lamps. The total factory overhead budget is $545,000 with 480,000 estimated direct labor hours. It is further estimated that small table lamp production will require 252,000 direct labor hours, and desk lamp production will need 125,000 direct labor hours.
Using a single plantwide factory overhead rate with an allocation base of direct labor hours, the factory overhead that Blackwelder Factory will allocate to desk lamp production if actual direct labor hours for the period for desk lamps is 183,000 would be
a. $750,492
b. $437,434
c. $208,620
d. $336,380

Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours.
Overhead DirectLabor Hours (dlh) Product A B Painting Dept. $251,000 10,600 dlh 3 dlh 8 dlh Finishing Dept. 64,100 11,200 2 9 Totals $315,100 21,800 dlh 5 dlh 17 dlh
Using a single plantwide rate, the factory overhead allocated per unit of Product B is
a. $245.65
b. $14.45
c. $71.04
d. $72.25

Kaumajet Factory produces two products: table lamps and desk lamps. It has two separate departments: Fabrication and Assembly. The factory overhead budget for the Fabrication Department is $516,261, using 465,100 direct labor hours. The factory overhead budget for the Assembly Department is $467,370, using 81,000 direct labor hours.
If a table lamp requires 3 hours of fabrication and 6 hour of assembly, the total amount of factory overhead that Kaumajet Factory will allocate to table lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours if 10,200 units are produced is
a. $165,349
b. $123,860
c. $58,854
d. $387,090

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.
Activity Cost Activity Base Procurement $353,200 Number of purchase orders Scheduling 210,100 Number of production orders Materials handling 439,100 Number of moves Product development 767,700 Number of engineering changes Production 1,529,700 Machine hours
Number ofPurchaseOrders Number of ProductionOrders NumberofMoves Number ofEngineeringChanges MachineHours NumberofUnits Disk drives 4,190 340 1,430 12 1,900 2,400 Tape drives 2,100 215 690 6 9,400 3,700 Wire drives 11,100 760 4,300 22 10,800 2,600
The activity rate for the scheduling activity cost pool is
a. $268.59 per production order
b. $159.77 per production order
c. $20.31 per production order
d. $69.22 per production order

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:
Square Feet Number ofEmployees Janitorial Department 100 20 Cafeteria Department 10,000 10 Cutting Department 2,000 60 Assembly Department 8,000 20
If the Janitorial Department incurs costs of $200,000, how much of that cost is allocated to the Cutting Department?
a. $40,000
b. $160,000
c. $20,000
d. $19,800

Using the sequential 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 determined to allocate Janitorial costs before Cafeteria costs.
It has the following information about its two service departments and two production departments, Cutting and Assembly:
Costs Square Feet Number ofEmployees Janitorial Department $450,000 100 20 Cafeteria Department 200,000 10,000 10 Cutting Department 1,500,000 2,000 60 Assembly Department 3,000,000 8,000 20
How much of the Janitorial Department's $450,000 costs is allocated to the Cutting Department?
a. $360,000
b. $90,000
c. $44,550
d. $45,000

The manufacturing costs of Calico Industries for three months of the year are provided below:
Total Cost Production (units) April $121,500 277,600 May 81,800 167,500 June 100,400 240,000
Using the high-low method, the variable cost per unit and the total fixed costs are
a. $3.60 per unit and $2,156
b. $0.65 per unit and $10,782
c. $6.48 per unit and $2,156
d. $0.36 per unit and $21,564

Jacob Inc. has fixed costs of $240,000, the unit selling price is $32, and the unit variable costs are $20. The old and new break-even sales (units), respectively, if the unit selling price increases by $4 is
a. 7,500 units and 6,667 units
b. 20,000 units and 30,000 units
c. 12,000 units and 15,000 units
d. 20,000 units and 15,000 units

Students also viewed