Chapter 19 Support Department and Joint Cost Allocation
multiple production department rates
A method of applying overhead to products in which overhead costs are first directly traced or distributed to support and production departments.
joint manufacturing process
A single manufacturing process that generates multiple outputs.
weight factors
Factors assigned to each product in a joint manufacturing process representing its importance in comparison to the other products.
by-products
Goods of low value that are produced from a joint production process.
distributing
In the context of activity-based costing, transferring overhead costs to support and production departments is referred to as __________ overhead costs.
reciprocal services method
In the context of allocating support department costs to production departments, the __________ considers all inter-support-department services and is the most difficult to implement when a large number of departments is involved.
direct method
In the context of allocating support department costs to production departments, which of the following methods is the easiest but the least accurate?
reciprocal services method
In the context of allocating support department costs to production departments, which of the following methods is the most difficult but the most accurate?
joint products
Sometimes a single manufacturing process generates multiple outputs. For example, the distillation of crude oil leads to the production of Gasoline and Kerosene. In this scenario, Gasoline and Kerosene are called __________.
cost center
Support departments are normally accounted for as a(n) __________.
service departments
Support departments are sometimes known as ________
joint costs
The costs incurred in a joint manufacturing process.
joint costs
The costs incurred when a single manufacturing process generates multiple outputs are called ________.
support department cost allocation
The costs of services provided by a support department transferred to production departments.
less
The direct method is ______ accurate than the sequential method.
joint products
The outputs generated from a joint manufacturing process.
split-off point
The point in a joint manufacturing process where the joint products become separable.
determine an appropriate cost driver
The second step for both the direct and sequential methods of allocating support department costs to production departments is to
net realizable value
The_____________ method of joint cost allocation 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.
allocating overhead costs.
Transferring support department costs to products is referred to as
support activity costs
Under activity-based costing (ABC), the costs of providing a necessary service to produce a product that is not directly involved in the production process.
joint manufacturing process
When a single manufacturing process generates multiple outputs, it is called a ________.
joint manufacturing process
When a single manufacturing process, such as the production of pharmaceuticals and medicines, generates multiple outputs, it is called a
single plantwide rate
When the ________ method is used to apply overhead to products, support department costs are simply combined with all other overhead costs.
multiple production department rates
When the __________ method is used to apply overhead to products, overhead costs are first directly traced or distributed to support and manufacturing departments.
maintenance department
Which of the following departments is necessary for production, but is not directly involved in production?
weighted average method
Which of the four common methods for allocating joint costs is likely to allocate joint costs based on the type of labor needed for each product?
physical units method
Which of the four common methods for allocating joint costs is likely to use gallons as a measure of the products at the split off point?
weighted average method
Which of the four common methods for allocating joint costs is the most appropriate if management wants joint cost allocations to reflect the difficulty with which products are made?
step-down method
The sequential method is also known as the
support department
A department that provides a necessary service to produce a product but is not directly involved in the production process. Also known as a service department.
service departments
A department that provides a necessary service to produce a product, but is not directly involved in the production process. Also known as a support department.
physical units method
A method of allocating joint costs to products based on a physical measure of the products at the split-off point, such as pounds, gallons, or inches.
market value at split-off method
A method of allocating joint costs to products based on each product's total market value at the split-off point.
weighted average method
A method of allocating joint costs to products based on weight factors for each product.
reciprocal services method
A method of allocating support department costs to production departments that considers all inter-support-department services.
step-down method
A method of allocating support department costs to production departments that considers some inter-support-department services in a sequential or step-down fashion. Also known as the sequential method.
sequential method
A method of allocating support department costs to production departments that considers some inter-support-department services in a sequential or step-down fashion. Also known as the step-down method.
single plantwide overhead rate
A method of applying overhead to products in which support department costs are combined with all other overhead costs, and the total overhead cost is then applied to the products using a single cost driver.
