# 8 which of the following is the most widely used method of allocating support depart 4302820

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.

 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

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Regards,

Cathy, CS.