Chapter 19 Accounting

J = $100,000 + (0.30 × M) M = $250,000 + (0.15 × J)

Anderson Equipment Manufacturing's Janitorial Department (J) includes not only $100,000 of direct costs but also 30% of the Maintenance Department (M) cost. The Maintenance Department includes not only $250,000 of direct costs but also 15% of the Janitorial Department cost.

weighted average method.

Because physical units alone are insufficient for providing the most reasonable allocation method, companies modify it by including important factors such as the type of labor needed for each product, the difficulty of producing each product, and the estimated wear and tear on machines caused by each product in the

joint costs

Costs incurred in a joint manufacturing process prior to the split-off point are called

allocating

Transferring costs among departments is referred to as _______costs.

applying

Transferring costs to products is referred to as ________ costs to products

distributing

Transferring overhead costs to support and production departments is referred to as __________ overhead costs.

Cutting: $20,000 Assembly: $80,000

It has the following information about its two service departments and two production departments, Cutting and Assembly: Square Feet Number of Employees Maintenance Department 1,500 20 Cafeteria Department 2,000 10 Cutting Department 2,000 60 Assembly Department 8,000 20 If Samantha Company has $100,000 of Maintenance Department costs, how much is allocated to the Cutting Department, and how much is allocated to the Assembly Department?

80%

It has the following information about its two service departments and two production departments, Cutting and Assembly: Square Feet Number of Employees Maintenance Department 1,500 20 Cafeteria Department 2,000 10 Cutting Department 2,000 60 Assembly Department 8,000 20 What is the percentage (proportional) usage of the Maintenance Department by the Assembly Department?

20%

It has the following information about its two service departments and two production departments, Cutting and Assembly: Square Feet Number of Employees Maintenance Department 1,500 20 Cafeteria Department 2,000 10 Cutting Department 2,000 60 Assembly Department 8,000 20 What is the percentage (proportional) usage of the Maintenance Department by the Cutting Department?

inseparable

Joint costs are _________ before the split-off point

Quantity

Net Realizable Value (for products not processed beyond the split-off point) = Final Selling Price × __________

. Additional Processing Costs

Net Realizable Value (for products processed beyond the split-off point) = (Final Selling Price × Quantity) - __________

Activity-based costing

Overhead costs are first directly traced or distributed to support and production activities, and then support activity costs are allocated to production activities based on the amount of support activity used by each production activity. Production activity costs are applied to the products using cost drivers for each production activity.

Multiple production department rates

Overhead costs are first directly traced or distributed to support and production departments and then allocated to production departments based on support activity used by each production department.

J = $200,000 + (0.10 × M) M = $50,000 + (0.40 × J)

Potter Company's Janitorial Department (J) includes not only $200,000 of direct costs but also 10% of the Maintenance Department (M) cost. The Maintenance Department includes not only $50,000 of direct costs but also 40% of the Janitorial Department cost.

Single plantwide overhead rate

Support department costs are combined with all other overhead costs and applied using a single cost driver

physical units method.

The method of joint cost allocation that allocates costs based on an objective, quantitative metric such as pounds, square feet, or gallons is the

market value at split-off method

The method of joint cost allocation that allocates costs based on each product's total market value at split-off is the

net realizable value method

The method of joint cost allocation that allocates costs based on the estimated selling price of the various finished products minus the costs to further process each product beyond the split-off point is the

split-off point

The place where the joint products become separable and where the costs can be separated is called the

85%

Using the sequential method, Samantha Company allocates Maintenance Department costs based on square footage serviced. It allocates Cafeteria Department costs based on the number of employees served. The company has determined to allocate Maintenance costs before Cafeteria costs. It has the following information about its two service departments and two production departments, Cutting and Assembly: Square Feet Number of Employees Maintenance Department 1,500 20 Cafeteria Department 1,000 10 Cutting Department 2,000 60 Assembly Department 17,000 20 What is the percentage (proportional) usage of the Maintenance Department by the Assembly Department?

10%

Using the sequential method, Samantha Company allocates Maintenance Department costs based on square footage serviced. It allocates Cafeteria Department costs based on the number of employees served. The company has determined to allocate Maintenance costs before Cafeteria costs. It has the following information about its two service departments and two production departments, Cutting and Assembly: Square Feet Number of Employees Maintenance Department 1,500 20 Cafeteria Department 1,000 10 Cutting Department 2,000 60 Assembly Department 17,000 20 What is the percentage (proportional) usage of the Maintenance Department by the Cutting Department?

Cutting: $10,000 Assembly: $85,000

Using the sequential method, Samantha Company allocates Maintenance Department costs based on square footage serviced. It allocates Cafeteria Department costs based on the number of employees served. The company has determined to allocate Maintenance costs before Cafeteria costs. It has the following information about its two service departments and two production departments, Cutting and Assembly: Square Feet Number of Employees Maintenance Department 1,500 20 Cafeteria Department 1,000 10 Cutting Department 2,000 60 Assembly Department 17,000 20 c. If Samantha Company has $100,000 of Maintenance Department costs, how much is allocated to the Cutting Department, and how much is allocated to the Assembly Department?

accumulate overhead costs, select an allocation method, and allocate overhead costs to products.

What is the correct sequence of events for allocating support department costs to products regardless of the method (single plantwide rate, multiple production department rates, or activity-based costing) chosen for the allocation process?

joint manufacturing process

When a single manufacturing process, such as the production of pharmaceuticals and medicines, generates multiple outputs, it is called a