a) Exercise 1: Using Warehouse Space as the cost driver, how much (dollars) would be allocated to the Retail Department? See circle on the printed exercise.

b) Exercise 1: Using Total Employees as the cost driver, how much (dollars) would be allocated to the Government Department? See circle on the printed exercise.

c) Exercise 2: Using Total Gallons as the cost driver, how much (dollars) would be allocated to the Medium Grade joint product? See circle on the printed exercise.

d) Exercise 2: What is the allocation rate per $ of Sales Value? See circle on the printed exercise.

e) Exercise 2: Using Sales Value at Split-Off as the cost driver, how much (dollars) would be allocated to the Premium Grade joint product? See circle on the printed exercise.

2) Total Employees Step 1: Compute an allocation rate Cost Driver(Allocation Indirect Costs Base Allocation Rate Lease Fee Employees per employee Step 2: Allocate costs Allocated Allocation Rate Cost Driver Retail emp Government$ emp TOTAL Allocating Fixed Overhead Costs: Since fixed costs do not vary with changes in volume, the options for allocation of these costs are limited. See completed example below for illustration on how we allocate these costs COMPLETED EXAMPLE: Baskings pays annual rent of $240,000 for its manufacturing facility. This is a FIXED COST and does not vary with production. Yet, we still often use volume (units produced) to estimate a cost per unit. During the year, Baskings produced 600,000 units and sold 560,000 units. Allocate the fixed costs among the units sold (Cost of Goods Sold) and ending inventory Step 1: Compute an allocation rate Cost Driver(Allocation Base) Indirect Costs Allocation Rate Rent Units produced 0.40 per unit $240,000 I 600,000 2IPage Step 2: Allocate costs: Allocation Rate Cost Driver Allocated End Inventory 0.40 40,000 (600,000-560,000) $ 16,000 0.40 560,000 units $ 224,000 COGS TOTAL $240,000 Joint Products- Cost Allocation: Some manufacturing processes start with incurring costs when the cost objects may not yet be identifiable. For example, during the refining process that transforms crude oil into different grades of gasoline, certain costs (joint costs) are incurred early in the process. Once the process reaches a point where each individual cost object is identifiable (split-off point), we must allocate the joint costs to these newly identifiable cost objects (joint products) EXERCISE 2: Axiom Petroleum operates an oil refining facility that produces three different grades of fuel. Following are the production and sales information for the month of August. Gallons ProducedSales Value at Split-off Point Product 336,000 175,000 ow grade Regular grade 480,000 460,000 384,000 405,000 remium grade OTAL 1,200,000 1,040,000 The Joint Costs of processing for August were $624,000. Determine the amount of joint costs allocated based on the gallons produced Step 1: Compute an allocation rate (Round to two digits beyond the decimal point) Total Joint Costs Cost Driver(Allocation Base) Allocation Rate Total Gallons produced per gallon 3I Page