StudentSol124e (2) - 12-23 RequirementsHow much of the...

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Unformatted text preview: 12-23 RequirementsHow much of the joint cost should be allocated to each joint product using the net realizable value method?SolutionProduct AProduct BTotalSales Value at Split-Off Percentage of Total NRVAllocated Joint CostPlus: Separable CostsTotal Costs12-25 Requirements1. What is the value of the ending inventory of product A?2. What is the value of the ending inventory of product B? Solution12-26 Requirements1. Determine the total cost allocated to the advertising and sales department using the direct method.2. Determine the total cost allocated to advertising and sales using the step method.3. Determine the total cost allocated to advertising and sales using the reciprocal method.Solution1)The Direct MethodNet service to both Production Departments(Advertising and Sales) for the Actuarial Service Dept:Advertising Department Share:Sales Department Share:Net service to both Production Departmentsfor Premium Department:Advertising Department Share:Sales Department Share:AdvertisingSalesDepartmentDepartmentActuarial DepartmentCost AllocationPremium DepartmentCost AllocationAdd: Initial ProductionDepartment CostsTotal Cost for Each Production Department2)The Step MethodThe Actuarial Department goes first since it provides the greatest service to the other servicedepartments:PremiumAdvertisingSalesDepartmentDepartmentDepartmentActuarial DepartmentCost AllocationPremium DepartmentCost AllocationAdd: Initial ProductionDepartment CostsTotal Cost for Each Production Department3)The Reciprocal MethodActuarial DepartmentCost AllocationPremium DepartmentCost AllocationAdd: Initial ProductionDepartment CostsTotal Cost for Each Production Department12-27 Requirements1. Determine the total cost of P1 and P2 using the direct method.2. Determine the total cost of P1 and P2 using the step method.3. Determine the total cost of P1 and P2 using the reciprocal method.Solution12-28 Requirements1. What are the costs allocated to the two production departments from the two service departments using (a) the direct method(b) the step method (both possible sequences), and (c) the reciprocal method?2. The company is considering outsourcing programming services to RJB Services, Inc., for $25.00per hour. Sould Williams do this?Solution12-29 Requirements1. What are the costs allocated to the two production departmets using (a) the direct method, (b) the step method with the sourcing department going first, and (c) the reciprocal method?2. What are the total costs in the production departments after allocation?Support DepartmentsProducing DepartmentsDirect MethodSourcingOperationsAssemblyFinishingDEPARTMENTAL ALLOCATION BASESSourcingpercentOperationspercentFIRST PHASE: Trace Direct Costs and Perform Initial Allocation of Indirect CostsTotals for All DepartmentsSECOND PHASE: Reallocate Service Department Costs to Production Departments: The Direct MethodSourcingService % to producing departmentsAllocation % per the direct methodAllocation amountOperationsService % to producing departments...
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This note was uploaded on 03/10/2012 for the course ACCOUNTING 5450 taught by Professor Brown during the Spring '12 term at Colorado Technical University.

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StudentSol124e (2) - 12-23 RequirementsHow much of the...

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