Question

32) Landslide Company has two service departments, Maintenance and Human Resources. Landslide Company also has two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while Human Resources costs are allocated based on number of employees. The following information has been gathered for the current year: Human Maintenance Resources Mixing Finishing Direct costs $126,000 $84,000 $105,000 $175,000 Square footage 800 1,600 1,200 Number of employees 24 32 If the step down method is used to allocate service department costs, and the Maintenance Department is allocated first, the amount of costs allocated from the Maintenance Department to the Mixing Department is A) 536,000 B) 542.000 S42,750 D) $63,000 E) My calculation is 33) Two conventional ways of allocating joint costs to products are A) physical units and incremental revenues 3) physical units and incremental expenses C) separable costs and relative ale values Dy physical units and relative sales values E) total assets and cost of goods sold

Answer 1

STEP DOWN METHOD
	MAINT	RESOURCE	MIXING	FINISHING
DIRECT COST	126000	84000	105000	175000
SQUARE	800	400	1600	1200
EMPLOYEES	8	12	24	32
ALLOCATING MAINT DEPT COST STEP DOWN METHOD BY COSIDERING SQUARE FOOT
	RESOURCE	MIXING	FINISHING	TOTAL
SQUARE	400	1600	1200	3200
126000 ALLOCATION	15750	63000	47250	126000
	(126000*400/3200)	(126000*1600/3200)	(126000*1200/3200)
SO MIXING DEPARTMENT ALLOCATION IS 63000
SO OPTION D $ 63000 IS CORRECT
2) TWO CONVENTIONAL METHOD OF ALLOCATING JOINT COST TO PRODUCE ARE
ANSWER : d) PHYSICAL UNITS AND RELATIVE SALES VALUE