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StudentSol124e (2) - 12-23 Requirements How much of the...

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12-23 Requirements How much of the joint cost should be allocated to each joint product using the net realizable value method? Solution
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Product A Product B Total Sales Value at Split-Off Percentage of Total NRV Allocated Joint Cost Plus: Separable Costs Total Costs
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12-25 Requirements 1. What is the value of the ending inventory of product A? 2. What is the value of the ending inventory of product B? Solution
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12-26 Requirements 1. 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. Solution 1)The Direct Method Net service to both Production Departments (Advertising and Sales) for the Actuarial Service Dept: Advertising Department Share: Sales Department Share: Net service to both Production Departments for Premium Department: Advertising Department Share: Sales Department Share: Advertising Sales Department Department Actuarial Department Cost Allocation Premium Department Cost Allocation Add: Initial Production Department Costs Total Cost for Each Production Department 2)The Step Method The Actuarial Department goes first since it provides the greatest service to the other service departments: Premium Advertising Sales Department Department Department Actuarial Department Cost Allocation Premium Department Cost Allocation Add: Initial Production Department Costs Total Cost for Each Production Department 3)The Reciprocal Method Actuarial Department Cost Allocation Premium Department Cost Allocation Add: Initial Production Department Costs Total Cost for Each Production Department
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12-27 Requirements 1. 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. Solution
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12-28 Requirements 1. 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 $25.00 per hour. Sould Williams do this? Solution
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12-29 Requirements 1. 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 Departments Producing Departments Direct Method Sourcing Operations Assembly Finishing DEPARTMENTAL ALLOCATION BASES Sourcing percent Operations percent FIRST PHASE: Trace Direct Costs and Perform Initial Allocation of Indirect Costs Totals for All Departments SECOND PHASE: Reallocate Service Department Costs to Production Departments: The Direct Method Sourcing Service % to producing departments Allocation % per the direct method Allocation amount Operations
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