Chapter 4B Quiz Solutions: Service Department Cost Allocation & Reciprocal Method - Prof. , Quizzes of Cost Accounting

Download Chapter 4B Quiz Solutions: Service Department Cost Allocation & Reciprocal Method - Prof. and more Quizzes Cost Accounting in PDF only on Docsity! Page 1 Quiz – Chapter 4B - Solutions Use the following to answer questions 1-4: The Uinta Company has two service departments and two operating departments. The following data are available from last year: Service Depts. Operating Depts. 1 2 X Y Departmental costs........ $63,000 $42,000 $200,000 $100,000 Number of transactions . 10,000 12,000 14,000 16,000 Square feet occupied ..... 2,000 1,000 3,000 2,000 The costs of service departments 1 and 2 are allocated on the basis of number of transactions and square feet occupied respectively. No distinction is made between fixed and variable costs. 1. Assuming that Uinta allocates service department costs by the direct method, the total overhead costs allocated from Department 1 to Department X are: A) $18,000. B) $25,200. C) $42,000. D) $29,400. D is correct X Y S1 $63,000 29,400 14,000/30,000 x 63,000 33,600 16,000/30,000 x $63,000 S2 $42,000 25,200 3,000/5,000 x $42,000 16,800 2,000/5,000 x $42,000 2. Assuming that Uinta allocates service department costs by the direct method, the total overhead costs allocated from Department 2 to Department Y are: A) $22,400. B) $16,800. C) $42,000. D) $14,000. B is correct. See above table. Page 2 3. Assume that Uinta allocates service department costs by the step method, starting with Department 1. The total overhead costs allocated from Department 1 to Department Y are: A) $12,115. B) $21,000. C) $24,000. D) $33,600. C is correct. S2 X Y S1 $63,000 $18,000 12K/42K x 63,000 21,000 14K/42Kx 63,000 24,000 16K/42Kx $63,000 S2 $60,000 ($42,000+18,000) 36,000 3K/5K x $60,000 24,000 2K/5K x $60,000 4. Assume that Uinta allocates service department costs by the step method, starting with Department 1. The total overhead costs allocated from Department 2 to Department Y are: A) $18,000. B) $24,000. C) $21,000. D) $25,200. B is correct.