Question 2 (1 point)

M&P Tool has three service departments that support the operating departments. Outlined below is the estimated overhead by department for the upcoming year:

	Estimated Overhead	Number of Employees
Service Departments:
Receiving	$25,000	2
Repair	$35,000	2
Tool	$10,000	1
Operating Departments:
Assembly		25
Bolting		12

The Repair Department supports the greatest number of departments, followed by the Tool Department. Overhead cost is allocated to departments based on the number of employees.

Using the direct method of allocation, how much of the Repair Departments overhead will be allocated to the Tool Department?

Question 2 options:

	$14,000
	$7,000
	$0
	$11,667
	$875

Question 3 (1 point)

Which of the following departments would be classified as a service department?

Question 3 options:

	Grinding
	Fabricating
	Finishing
	Assembly
	Engineering

Question 4 (1 point)

Consider the following data:

Department	Employees	Kilowatt Hours Used	Work Orders Issued
Furniture	30	5,180	100
Decor	10	8,060	60
Power	6
Maintenance	4

Power Department costs are $26,000. Maintenance Department costs are $30,000. Personnel Department costs are $4,000. The Personnel Department provides services to all departments. Use the step-down method of service department cost allocation and determine the amount of service department costs (Personnel, Power, and Maintenance) that will be charged to the Furniture Department.

Question 4 options:

	$0
	$41,210
	$18,790
	$31,710

Question 5 (1 point)

ABC Company has two service departments (Power and Maintenance) and two operating departments (Assembly and Finishing). The direct allocation method is used to assign service department costs to the operating departments. The allocation base for the power costs is kilowatt hours; the allocation base for the maintenance costs is repair hours. Assume the following information:

	Power	Maintenance	Assembly	Finishing
Direct costs	$100,000	$150,000	$75,000	$50,000
Kilowatt hours		10,000	90,000	100,000
Repair hours	500		2,500	2,000

What would be the Maintenance Department allocation to the Finishing Department?

Question 5 options:

	$20,000
	$66,667
	$60,000
	$71,111
	$22,222

Question 6 (1 point)

Consider the following data for the Lumber Production Departments:

Departments and Costs	Furniture	Construction	Cabinet
Power department costs $72,200 kilowatt hours used	5,000	8,000	6,000
Maintenance department costs: $45,000 maintenance work orders	100	150	50
Personnel department costs: $24,050 employees	30	25	10

Use the direct method of service department cost allocation and determine the amount of the service department costs that will be charged to the Furniture Department.

Question 6 options:

	$0
	$62,150
	$45,100
	$30,400
	$141,250

Question 7 (1 point)

Which of the following best describes the two-stage allocation process?

Question 7 options:

	Costs are first allocated to products, then costs are allocated to services.
	Costs are first allocated to service departments, then costs are allocated to products.
	Costs are first allocated to operating departments, then costs are allocated to products.
	Costs are first traced to service departments, then costs are allocated to units.
	Costs are first allocated to operating departments, then costs are traced to service departments.

Question 8 (1 point)

ABC Company has two service departments (Power and Maintenance) and two operating departments (Assembly and Finishing). The direct allocation method is used to assign service department costs to the operating departments. The allocation base for the power costs is kilowatt hours; the allocation base for the maintenance costs is repair hours. Assume the following information:

	Power	Maintenance	Assembly	Finishing
Direct costs	$100,000	$150,000	$75,000	$50,000
Kilowatt hours		10,000	90,000	100,000
Repair hours	500		2,500	2,000

What would be the Power Department allocation to the Assembly Department?

Question 8 options:

	$45,000
	$50,000
	$54,474
	$47,368
	$82,895

Question 9 (1 point)

The direct allocation method

Question 9 options:

	results in allocating only the support costs used by operating departments.
	is also referred to as the sequential method.
	partially recognizes the services provided among support departments.
	is conceptually the most precise method.

Question 10 (1 point)

Madison Company has two service departments (personnel and accounting) and two operating departments (computer and video). The computer department uses 40% of the accounting department services, the video department uses 50% and the personnel department uses 10%. If the accounting department incurs $50,000 of costs, under the direct method what is the amount of costs that would be allocated?

Question 10 options:

	Video $27,778; and Computer $22,222
	Video $25,000; and Computer $25,000
	Personnel $5,000; Video $25,000; and Computer $20,000
	None of the alternatives are correct
	Personnel $10,000; Video $50,000; and Computer $40,000