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.

 

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