Question

In: Accounting

1.) Pepper Department store allocates its service department expenses to its various operating (sales) departments. The...

1.) Pepper Department store allocates its service department expenses to its various operating (sales) departments. The following data is available for its service departments:

Expense Basis for allocation Amount
Rent Square feet of floor space $31,000
Advertising Amount of dollar sales $44,000
Administrative Number of employees $66,000


The following information is available for its three operating (sales) departments:


Department		 Square
Feet		 Dollar
Sales		 Number of
employees
A     3,700 $301,000 13
B     4,100 $321,000 15
C     4,300 $448,000 17
Totals 12,100 $1,070,000 45


What is the total advertising expense allocated to Department C?

$44,000.

$18,422    .

$21,922.

$20,222.

$9,600.

2.)

A granary allocates the cost of unprocessed wheat to the production of feed, flour, and starch. For the current period, unprocessed wheat was purchased for $400,000, and the following quantities of product and sales revenues were produced. Joint cost is allocated on Value basis method.

  

Product Pounds Price per Pound
  Feed 130,000 $2.30
  Flour 46,000 2.40
  Starch 16,000 5.00

  

How much of the $400,000 cost should be allocated to feed? (Round your intermediate percentage to the nearest whole percent.)

$299,000.

$244,000.

$0.

$400,000.

$173,333.

3.)

Wren Pork Company uses the relative market value method/Value basis method of allocating joint costs in its production of pork products. Relevant information for the current period follows:

Product Pounds Price/lb.
Loin chops 3,600 $8.00
Ground 11,500 3.50
Ribs 4,900 7.00
Bacon 7,200 5.00


The total joint cost for the current period was $61,000. How much of this cost should Wren Pork allocate to Loin chops?

$0.

$9,916.

$12,607.

$15,250.

$61,000.

4.)

Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 2's contribution to overhead in dollars is:


Dept.
Sales		 Cost of
Goods Sold		 Direct
Expenses		 Indirect
Expenses
1 $1,200,000 $840,000 $120,000 $96,000
2 480,000 180,000 48,000 120,000
3 840,000 360,000 180,000 24,000

$252,000.

$420,000.

$12,000.

$312,000.

$180,000.

Solutions

Expert Solution

  • All working forms part of the answer
  • Answer 1

A

Advertising total cost

$                        44,000.00

Cost driver

Dollar Sales

B

Department C Dollar Sales

$                    4,48,000.00

C

Total Dollar Sale

$                  10,70,000.00

D=A x (B/C)

Total Advertising expense allocated to Department C

$                        18,422

Correct Answer: Option 2nd: $18,422

  • Answer 2 with working

Product

Pounds

Price per Pound

Value

  Feed

1,30,000

$                                   2.30

$             2,99,000.00

  Flour

46,000

$                                   2.40

$             1,10,400.00

  Starch

16,000

$                                   5.00

$                 80,000.00

TOTAL

$             4,89,400.00

A

Value of Feed

$                    2,99,000.00

B

Total of Values

$                    4,89,400.00

C=A/B

% of Feed

61%

D

Amount to be allocated

$                    4,00,000.00

E= C x D

Cost allocated to FEED

$                    2,44,000.00

Correct Answer: Option 2nd: $ 244,000

  • Answer 3 with working

Product

Pounds

Price/lb.

Value

Loin chops

3,600

$                                   8.00

$                 28,800.00

Ground

11,500

$                                   3.50

$                 40,250.00

Ribs

4,900

$                                   7.00

$                 34,300.00

Bacon

7,200

$                                   5.00

$                 36,000.00

TOTAL

$             1,39,350.00

A

Value of Loin Chops

$                        28,800.00

B

Total of Values

$                    1,39,350.00

C

Total Joint Cost

$                        61,000.00

D = C x (A/B)

Joint Cost allocated to Loin Chops

$                        12,607

Correct Answer: Option 3rd: $ 12,607

  • Answer 4

Department 2

Sales

$                    4,80,000.00

Cost of Goods Sold

$                  (1,80,000.00)

Direct expenses

$                      (48,000.00)

Contribution to Overhead

$                    2,52,000.00

Correct Answer: Option 1st: $252,000

ekkarill92 answered 1 year ago
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