Question

Hugo, owner of Automated​ Fabric, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for​ analysis:
Budgeted manufacturing overhead costs​:
     Maintenance M​ (Support Dept)
$330,000
     Personnel P​ (Support Dept)
$200,000
     Weaving W​ (Weaving Dept)
$660,000
     Colorizing C​ (Colorizing Dept)
$370,000
Services furnished​:
By Maintenance​ (budgeted labor−​hours):
     to Personnel
2,000
     to Weaving
8,000
     to Colorizing
4,000
By Personnel​ (Number of employees​ serviced):
     Plant Maintenance
8
     Weaving
33
     Colorizing
24
What is the complete reciprocated cost of the Maintenance​ Department? (Do not round any intermediary​ calculations.)
A.
$330,000
B.
$360,973
C.
$354,620
D.
​$0
Click to select your answer.

Bismite Corporation purchases trees from Cheney lumber and processes them up to the split−off point where two products​ (paper and pencil​ casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of​ October:
Trees processed​:
300 trees
Production​:
paper
170,000 sheets
pencil casings
170,000
Sales​:
paper
160,000 at $0.10 per page
pencil casings
167,500 at $0.15 per casing
The cost of purchasing 300 trees and processing them up to the split−off point to yield 170,000 sheets of paper and 170,000 pencil casings is $13,500.
​Bismite's accounting department reported no beginning inventory.
What is the total sales value at the split−off point for​ paper?
A.
$25,500
B.
$17,000
C.
$25,125
D.
$16,000
Click to select your answer.

A financial analyst for Simon Manufacturing prepared the following​ report:
Customers
Customer−
Level Operating Income
Customer Revenue
A
​$5,041.00
​$26,250
B
​$4,202.00
​$30,000
C
​$3,368.00
​$15,000
D
​$1,069.50
​$7,300
E
​$984.80
​$5,100
F
​$844.80
​$4,400
G
​$336.60
​$1,800
H
​$252.00
​$4,500
I
​($168.00)
​$2,400
J
​($676.00)
​$2,600
What is the cumulative customer−level operating income as a percentage of customer level operating income for the top 4 most profitable​ (operating income)​ customers?
A.
​17.4%
B.
​79.1%
C.
​85.0%
D.
​89.7%

Bismite Corporation purchases trees from Cheney lumber and processes them up to the split−off point where two products​ (paper and pencil​ casings) emerge from the process. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of​ October:
Trees processed​:
260 trees
Production​:
paper
180,000 sheets
pencil casings
180,000
Sales​:
paper
169,000 at $0.20 per page
pencil casings
176,000 at $0.24 per casing
The cost of purchasing 260 trees and processing them up to the split−off point to yield 180,000 sheets of paper and 180,000 pencil casings is $13,000.
​Bismite's accounting department reported no beginning inventory.
What are the​ paper's and the​ pencil's approximate weighted cost proportions using the sales value at split−off ​method, respectively?
A.
50​% and 50​%
B.
45.45​% and 54.55​%
C.
48.99​% and 51.01​%
D.
44.45​% and 55.55​%

Hanung Corp has two service​ departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance−hours. Personnel Department costs of $140,000 are allocated based on the number of employees. The costs of operating departments A and B are $184,000 and $276,000​, respectively. Data on budgeted maintenance−hours and number of employees are as​ follows:
                                                                                                                   
Support Departments
Production Departments
Maintenance Department
Personnel Department
A
B
Budgeted costs
$320,000
$140,000
$184,000
$276,000
Budgeted maintenance−hours
NA
900
1,290
670
Number of employees
55
NA
240
650
Using the step−down ​method, what amount of Maintenance Department cost will be allocated to Department A if the service department with the highest percentage of interdepartmental support service is allocated​ first? (Do not round any intermediary​ calculations.)
A.
$121,102
B.
$144,336
C.
$63,147
D.
$210,612


Bismite Corporation purchases trees from Cheney lumber and processes them up to the split−off point where two products​ (paper and pencil​ casings) emerge from the process. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of​ October:
Trees processed​:
260 trees
Production​:
paper
160,000 sheets
pencil casings
160,000
Sales​:
paper
155,000 at $0.20 per page
pencil casings
156,500 at $0.25 per casing
The cost of purchasing 260 trees and processing them up to the split−off point to yield 160,000 sheets of paper and 160,000 pencil casings is $15,500.
​Bismite's accounting department reported no beginning inventory.
If the sales value at split−off method is​ used, what is the approximate production cost for each pencil ​casing? (Round intermediary percentages to the nearest​ hundredth.)
A.
$0.044
B.
$0.054
C.
$0.056
D.
$0.043

Alfred, 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)
$330,000
     Data Processing DP​ (Support Dept)
$70,000
     Machining M​ (Operating Dept)
$200,000
     Capping C​ (Operating Dept)
$145,000
Services furnished​:
By Plant Maintenance​ (budgeted labor−​hours):
     to Data Processing
3,100
     to Machining
5,600
     to Capping
8,700
By Data Processing​ (budgeted computer​ time):
     to Plant Maintenance
950
     to Machining
3,500
     to Capping
850
Which of the following linear equations represents the complete reciprocated cost of the Data Processing​ Department?
A.
​DP= $330,000 ​+ ​(950 ​/ 17,400​) DP
B.
​DP= $70,000 ​+ ​(3,100​/ 17,400​) PM
C.
​DP= $70,000 × ​(950 ​/ 5,300​) ​+ $330,000 × ​(3,100 ​/ 17,400​)
D.
​DP= $70,000 ​+ ​(950 ​/ 5,300​) PM

Hanung Corp has two service​ departments, Maintenance and Personnel. Maintenance Department costs of $380,000 are allocated on the basis of budgeted maintenance−hours. Personnel Department costs of $140,000 are allocated based on the number of employees. The costs of operating departments A and B are $208,000 and $312,000​, respectively. Data on budgeted maintenance−hours and number of employees are as​ follows:
                                                                                                                   
Support Departments
Production Departments
Maintenance Department
Personnel Department
A
B
Budgeted costs
$380,000
$140,000
$208,000
$312,000
Budgeted maintenance−hours
NA
880
1,250
600
Number of employees
65
NA
290
680
Using the step−down ​method, what amount of Maintenance Department cost will be allocated to Department B if the service department with the highest percentage of interdepartmental support service is allocated​ first? (Do not round any intermediary​ calculations.)
A.
$64,103
B.
$83,516
C.
$30,769
D.
$40,366

Answer 1

Question 1

	Maintenance (M)	personal (P)	Weaving (W)	Colorizing (C)
Budgeted Manufacturing Overhead Cost	330000	200000	660000	370000

Maintenance department

	Machine Hours	% of Total
Personnel	2000	1/7
Weaving	8000	4/7
Colorizing	4000	2/7
Total	14000

Personnel Department

	Employees	% of Total
Plant maintenance	8	8/65
Weaving	33	33/65
Colorizing	24	24/65
	65

Total Maintenace Cost = Maintenance department cost + cost allocated to maintenance from personnel

Total personnel cost = personnel department cost + cost allocated to personnel from maintenance.

Thus, Total Personnel Cost (TPC) = 200000+(1/7*Total Maintenance Cost)

= 200000+ {1/7 * [ 330000 + (TPC*8/65)]}

= 200000+(330000/7)+[(TPC*8/65)/7]

TPC - [(TPC*8/65)/7] = 247142.8571

7TPC - (TPC*8/65) = 247142.8571*7

6.8769TPC = 247142.8571*7

TPC = 251565.9955

TMC = 330000 + (8/65*251565.9955)

TMC = 360961.9687

Answer = B.$360,973

Question 2

Trees processed​:	300 trees
Cost of Processing	$ 13500
paper produced	170,000 sheets
pencil casings	170,000

Sales Revenue​:
paper = 160,000 at $0.10 per page = $16000
pencil casings = 167,500 at $0.15 per casing = $25125
total sales value at the split−off point for​ paper will be 170000*0.10 = $17000

Answer B. $17,000

Question 3

Customer	Level Operating income	Customer Revenue
A	​$5,041.00	​$26,250
B	​$4,202.00	​$30,000
C	​$3,368.00	​$15,000
D	​$1,069.50	​$7,300
E	​$984.80	​$5,100
F	​$844.80	​$4,400
G	​$336.60	​$1,800
H	​$252.00	​$4,500
I	​($168.00)	​$2,400
J	​($676.00) ​	$2,600
Total	15274.7	99350

customer level operating income for the top 4 most profitable​ (operating income)​ customers

=5,041.00+4,202.00+3,368.00+1,069.50 = 13680.5

Percentage = 13680.5/15274.7 = 89.56%

Answer D.89.7%

Question 4

Trees processed​:	260 trees
Cost of Processing	$ 13000
paper produced	180,000 sheets
pencil casings	180,000

Sales Revenue​:
paper = 169,000 at $0.2 per page = $33800
pencil casings = 176000 at $0.24 per casing = $42240
total sales value at the split−off point for​ paper will be 170000*0.10 = $17000

weighted cost proportions using the sales value at split−off ​method

Sales Value at Split off

Paper = 180000*0.2 = 36000

Pencil casings = 180000*0.24 = 43200

Total = 36000+43200 = 79200

Proportion: Paper = 36000/79200 = 45.45% & Pencil Casing = 43200/79200 =54.55%

Answer B.45.45​% and 54.55​%