Question

1. Yo-Down Inc. produces yogurt. Information related to the company’s yogurt production follows:

	Production Department 1		Production Department 2		Production Department 3
Support Department 1 cost driver	5,000		1,000		4,000

Support Department 1’s costs total $140,000. Using the direct method of support department cost allocation, determine the costs from Support Department 1 that should be allocated to each production department.

	Production Department 1		Production Department 2		Production Department 3
Support Department 1 cost allocation	$ ??		$ ??		$ ??

2. Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $269,000. The total cost of the Cafeteria Department is $414,000. The number of employees and the square footage in each department are as follows:

	Employees		Square Feet
Security Department	10		580
Cafeteria Department	18		2,400
Laser Department	40		3,200
Forming Department	50		2,400

Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and to each of the production departments.

	Cafeteria Department		Laser Department		Forming Department
Security Department cost allocation	$ ??		$ ??		$ ??

3. Sugar Sweetheart, Inc., jointly produces raw sugar, granulated sugar, and caster sugar. After the split-off point, raw sugar is immediately sold for $0.20 per pound, while granulated and caster sugar are processed further. The market value of the granulated sugar and caster sugar is estimated to both be $0.25 at the split-off point. One batch of joint production costs $1,640 and yields 3,000 pounds of raw sugar, 3,600 pounds of granulated sugar, and 2,000 pounds of caster sugar at the split-off point.

Allocate the joint costs of production to each product using the market value at split-off method.

Joint Product	Allocation
Raw sugar	$ ??
Granulated sugar	$ ??
Caster sugar	$ ??
Totals	$ ??

Answer 1