MA CH17 HW1

Hudson Community College enrolls students in two departments, Liberal Arts and Sciences. The college also has two service departments, the Library and the Computing Services Department. The usage of these two service departments’ output for the year is as follows:

Provider of Service

  User of Service

Library

Computing Services

  Library

—

20

%

  Computing Services

—

—

  Liberal Arts

60

%

30

%

  Sciences

40

%

50

%

The budgeted costs in the two service departments for the year are as follows:

  Library

$

710,000

  Computing Services

240,000

Required:

1.

Use the direct method to allocate the budgeted costs of the Library and Computing Services Department to the college’s Liberal Arts and Sciences departments. (Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

  Provider of Service

Liberal Arts

Sciences

  Library

$    

$    

  Computing

  Total

$    

$   

Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments’ output for the year is as follows:

Provider of Service

  User of Service

HR

Computing

  HR

—

15

%

  Computing

20

%

—

  Deposit

50

%

50

%

  Loan

30

%

35

%

The budgeted costs in the two service departments for the year are as follows:

  HR

$

162,000

  Computing

239,700

Required:

Use the direct method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan departments. (Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

  Provider of Service

Deposit

Loan

  HR

$    

$    

  Computing

  Total

$    

$    

Breakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows:

Joint Cost

Cereal

Quantity at Split-Off Point

Sales Price per Kilogram

$

46,000

Yummies

28,800

 kilograms

$

4.90

Crummies

7,200

 kilograms

5.40

Required:

Use the physical-units method to allocate the company’s joint production cost between Yummies and Crummies. (Do not round intermediate calculations. Omit the "$" sign in your response.)

Allocation of Joint Cost

  Yummies

$  

  Crummies

$  

Hudson Community College enrolls students in two departments, Liberal Arts and Sciences. The college also has two service departments, the Library and the Computing Services Department. The usage of these two service departments’ output for the year is as follows:

Provider of Service

  User of Service

Library

Computing Services

  Library

—

20

%

  Computing Services

—

—

  Liberal Arts

60

%

30

%

  Sciences

40

%

50

%

The budgeted costs in the two service departments for the year are as follows:

  Library

$

600,000

  Computing Services

240,000

Required:

1.

Use the step-down method to allocate Hudson Community College’s service department costs to the Liberal Arts and Sciences departments. (Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Liberal Arts

Sciences

  Allocation of Computing Service costs

$   

$   

  Allocation of Library costs

  Total costs allocated to each department

$   

$   

Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments’ output for the year is as follows:

Provider of Service

  User of Service

HR

Computing

  HR

—

15

%

  Computing

10

%

—

  Deposit

60

%

50

%

  Loan

30

%

35

%

The budgeted costs in the two service departments for the year are as follows:

  HR

$

153,000

  Computing

229,500

Required:

Use the step-down method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan departments. Tuscaloosa National Bank allocates the costs of the HR Department first. (Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Deposit

Loan

  Allocation of HR Department costs

$  

$  

  Allocation of Computing Department costs

  Total costs allocated to each department

$  

$  

Breakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows:

Joint Cost

Cereal

Quantity at Split-Off Point

Sales Price per Kilogram

$

30,000

Yummies

12,000

 kilograms

$

2.00

Crummies

8,000

 kilograms

2.50

Required:

Use the relative-sales-value method to allocate Breakfasttime Cereal Company’s joint production cost between Yummies and Crummies. (Round your calculation of relative proportions to 3 decimal places. Omit the "$" sign in your response.)

Sales Value at Split-off Point

Allocation of Joint Cost

  Yummies

$   

$   

  Crummies

  Total

$   

$   

Breakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows:

Joint Cost

Cereal

Quantity at Split-Off Point

Sales Price per Kilogram

$

30,000

Yummies

12,000

 kilograms

$

2.00

Crummies

8,000

 kilograms

2.50

Breakfasttime Cereal Company has an opportunity to process its Crummies further into a mulch for ornamental shrubs. The additional processing operation costs $.50 per kilogram, and the mulch will sell for $3.50 per kilogram.

Required:

1-a.

Compute the incremental revenue per kilogram if management decide to process Crummies into the mulch. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

  Net incremental revenue

$ per kilogram  

1-b.

Should Breakfasttime’s management decide to process Crummies into the mulch?

Worksheet

Difficulty: Medium

Learning Objective: 17-04 Allocate joint costs among joint products using each of the following techniques: physical-units method, relative-sales-value method, and net-realizable-value method.

2.

Suppose the company does process Crummies into the mulch. Use the net-realizable-value method to allocate the joint production cost between the mulch and the Yummies. (Do not round intermediate calculations. Omit the "$" sign in your response.)

Allocation of Joint Cost

  Yummies

$  

  Mulch

$  

Worksheet

Difficulty: Medium

Learning Objective: 17-04 Allocate joint costs among joint products using each of the following techniques: physical-units method, relative-sales-value method, and net-realizable-value method.

Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CBL). A standard production run incurs joint costs of $300,000 and results in 60,000 units of MSB and 90,000 units of CBL. Each MSB sells for $2, and each unit of CBL sells for $4.

2.

Calculate the amount of joint cost allocated to the mine support braces (MSB) on a relative-sales-value basis. (Do not round your intermediate calculations. Omit the "$" sign in your response.)

  Joint cost allocated to MSB

$  

Worksheet

Learning Objective: 17-04 Allocate joint costs among joint products using each of the following techniques: physical-units method, relative-sales-value method, and net-realizable-value method.

Difficulty: Medium

Learning Objective: 17-05 Describe the purposes for which joint cost allocation is useful and those for which it is not.

3.

Assume the commercial building lumber is not marketable at split-off but must be further planed and sized at a cost of $200,000 per production run. During this process, 10,000 units are unavoidably lost; these spoiled units have no value. The remaining units of commercial building lumber are saleable at $10 per unit. The mine support braces, although saleable immediately at the split-off point, are coated with a tarlike preservative that costs $100,000 per production run. The braces are then sold for $5 each. Using the net-realizable-value basis, compute the completed cost assigned to each unit of commercial building lumber. (Do not round your intermediate calculations. Round your answer to 2 decimal places.Omit the "$" sign in your response.)

  Cost per unit of CBL

$  

Worksheet

Learning Objective: 17-04 Allocate joint costs among joint products using each of the following techniques: physical-units method, relative-sales-value method, and net-realizable-value method.

Difficulty: Medium

Learning Objective: 17-05 Describe the purposes for which joint cost allocation is useful and those for which it is not.