Harvest Corporation has two service departments (S1 and S2) and two production departments (P1

and P2), and uses the step-down method of cost allocation. Management has determined that S1
provides more service to the firm than S2, and has decided that the number of employees is the best
allocation base to use for S1. The following data are available:

Which of the following statements is (are) true if S1 and S2 have respective operating costs of
$280,000 and $350,000?
S2 should allocate a portion of its $350,000 cost to S1.
S1's cost should be allocated (i.e., spread) over 140 employees.
S2 should allocate a total of $390,000 to P1 and P2.
S1's cost should be allocated (i.e., spread) over 150 employees.
Both S1's cost should be allocated (i.e., spread) over 140 employees and S2 should allocate a total
of $390,000 to P1 and P2.

The Dollar Store has a Human Resources Department and a Janitorial Department that provide
service to three sales departments. The Human Resources Department cost is allocated on the
basis of employees, and the Janitorial Department cost is allocated on the basis of space. The
following information is available:

Using the step-down method and assuming that the Human Resources Department is allocated first,
the amount of Human Resources cost allocated to Sales Department no. 3 is:
$12,857.
$22,500.
$12,000.
$15,000.
$13,500.

Seymore Company has two service departments (Cafeteria and Human Resources) and two
production departments (Machining and Assembly). The number of employees in each department
follows.
Seymore uses the step-down method of cost allocation and allocates cost on the basis of
employees. Human Resources cost amounts to $1,200,000, and the department provides more
service to the firm than Cafeteria. How much Human Resources cost would be allocated to
Assembly?
None of the other answers are correct.
$480,572.
$444,444.
$666,666.
$0.

Which of the following methods should be selected if a company terminates all processing at the
split-off point and desires to use a cost-allocation approach that considers the "revenue-producing
ability" of each product?
Physical-units method.
Relative-sales-value method.
Reciprocal-accounting method.
Net-realizable-value method.
Gross margin at split-off method.

Martina, Inc. has two service departments (Human Resources and Building Maintenance) and two
production departments (Machining and Assembly). The company allocates Building Maintenance
cost on the basis of square footage and believes that Building Maintenance provides more service
than Human Resources. The square footage occupied by each department follows.

Assuming use of the step-down method, over how many square feet would the Building
Maintenance cost be allocated (i.e., spread)?
50,000.
19,000.
More information is needed to judge.
63,000.
44,000.

The Metropolitan Clinic has two service departments (S1 and S2) and two "production" departments
(P1 and P2). The service departments service the "production" departments as well as each other,
and studies have shown that S2 provides the greater amount of service. Which of the following
choices correctly denotes an allocation that would not occur under (1) the direct method and (2) the
step-down method of cost allocation?

Choice B
Choice A
Choice C
Choice E
Choice D

Pederson Company has two service departments (Cafeteria and Human Resources) and two
production departments (Machining and Assembly). The number of employees in each department
follows.

Pederson uses the direct method of cost allocation and allocates cost on the basis of employees. If
Human Resources cost amounts to $1,800,000, how much of the department's cost would be
allocated to Assembly?
$1,200,000.
$720,000.
$1,080,000.
$900,000.
None of the other answers are correct.
Rocky Mountain Company produces two products (X and Y) from a joint process. Each product may
be sold at the split-off point or processed further. Additional processing requires no special facilities,
and production costs of further processing are entirely variable and traceable to the products
involved. Joint manufacturing costs for the year were $60,000. Sales values and costs were as
follows:

If the joint production costs are allocated based on the net-realizable-value method, the amount of
joint cost assigned to product Y would be:
$27,000.
None of the other answers are correct.
$20,000.
$40,000.
$33,000.

The Dopler Manufacturing Company has two production departments (Assembly and Finishing) and
two service departments (Human Resources and Janitorial). The projected usage of the two service
departments is as follows:

The budgeted costs in the service departments are: Human Resources, $90,000 and Janitorial,
$50,000.

Using the direct method, the amount of Janitorial Department cost allocated to the Finishing
Department is:
$34,157.
$28,947.
$21,053.
$25,000.
$24,843.
When allocating service department costs, companies should use:
actual costs rather than budgeted costs, and a rate that combines variable and fixed costs.
budgeted costs rather than actual costs, and separate rates for variable and fixed costs.
budgeted costs rather than actual costs, and a rate that combines variable and fixed costs.
actual costs rather than budgeted costs, and separate rates for variable and fixed costs.
a rate that is based on matrix theory.

Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint
costs amounted to $80,000 in the production of 20,000 gallons of P and 60,000 gallons of Q. Garage
can sell P and Q at split-off for $2.20 per gallon and $2.60 per gallon, respectively. Alternatively,
both products can be processed beyond the split-off point, as follows:

The joint cost allocated to P under the relative-sales-value method would be:
$24,000.
None of the other answers are correct.
$25,600.
$16,400.
$17,600.

The Hearts and Hands Clinic has two service departments (Human Resources and Information
Systems) and two "production" departments (In-patient Treatment and Out-patient Treatment). The
service departments service the "production" departments as well as each other, and studies have
shown that Information Systems provides the greater amount of service. Which of the following
allocations would not occur if Hearts uses the step-down method of cost allocation?
Human Resources cost would be allocated to Information Systems.
Information Systems cost would be allocated to Human Resources.
Human Resources cost would be allocated to In-patient Treatment.
Both Human Resources cost would be allocated to Information Systems and In-patient Treatment
cost would be allocated to Out-patient Treatment.
In-patient Treatment cost would be allocated to Out-patient Treatment.

Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint
costs amounted to $80,000 in the production of 20,000 gallons of P and 60,000 gallons of Q. Garage
can sell P and Q at split-off for $2.20 per gallon and $2.60 per gallon, respectively. Alternatively,
both products can be processed beyond the split-off point, as follows:
The joint cost allocated to Q under the relative-sales-value method would be:
$40,000.
$65,600.
$64,000.
$62,400.
None of the other answers are correct.

The Dollar Store has a Human Resources Department and a Janitorial Department that provide
service to three sales departments. The Human Resources Department cost is allocated on the
basis of employees, and the Janitorial Department cost is allocated on the basis of space. The
following information is available:

Using the direct method, the amount of Janitorial Department cost allocated to Sales Department no.
2 is:
$8,654.
$10,350.
$8,571.
$9,000.
$14,210.

Nash Corporation allocates administrative costs on the basis of staff hours. Short-run monthly usage
and anticipated long-run monthly usage of staff hours for Operating Departments 1 and 2 follow.

Variable and fixed administrative costs total $180,000 and $400,000, respectively. If Nash uses dual-
cost accounting procedures, the total amount of administrative cost to allocate to Department 2
would be:
$313,600.
None of the other answers are correct.
$301,600.
$307,000.
$319,000.

Seymore Company has two service departments (Cafeteria and Human Resources) and two
production departments (Machining and Assembly). The number of employees in each department
follows.

Seymore uses the step-down method of cost allocation and allocates cost on the basis of
employees. Human Resources cost amounts to $1,200,000, and the department provides more
service to the firm than Cafeteria. How much Human Resources cost would be allocated to
Cafeteria?
None of the other answers are correct.
$88,888.
$0.
$44,444.
$28,572.

Which of the following choices correctly denotes the data needed to allocate joint costs under the
relative-sales-value method?

Choice B
Choice E
Choice D
Choice A
Choice C

Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs
amounted to $300,000 in the production of 20,000 gallons of W and 60,000 gallons of X. Both
products will be processed beyond the split-off point, giving rise to the following data:

The joint cost allocated to X under the net-realizable-value method would be:
$190,000.
$184,000.
$180,000.
None of the other answers are correct.
$210,000.

The Dopler Manufacturing Company has two production departments (Assembly and Finishing) and
two service departments (Human Resources and Janitorial). The projected usage of the two service
departments is as follows:

The budgeted costs in the service departments are: Human Resources, $90,000 and Janitorial,
$50,000.

Using the step-down method and assuming the Human Resources Department is allocated first, the
total amount of service department cost allocated to the Finishing Department is:
$81,053.
$78,842.
$61,158.
$74,000.
$58,947.

Hreck, Inc. has two service departments (Human Resources and Building Maintenance) and two
production departments (Machining and Assembly). The company allocates Building Maintenance
cost on the basis of square footage and believes that Building Maintenance provides more service
than Human Resources. The square footage occupied by each department follows.
Assuming use of the step-down method, over how many square feet would the Building
Maintenance cost be allocated (i.e., spread)?
More information is needed to judge.
48,000.
18,000.
66,000.
55,000.

Which of the following would be considered a service department for an airline?

All of the other answers are correct.
Flight Catering.
Information Systems.
Maintenance.
Purchasing.

Visions, Inc. has two service departments (Human Resources and Building Maintenance) and two
production departments (Machining and Assembly). The company allocates Building Maintenance
cost on the basis of square footage and believes that Building Maintenance provides more service
than Human Resources. The square footage occupied by each department follows.

Over how many square feet would the Building Maintenance cost be allocated (i.e., spread) with the
direct method and the step-down method?
Choice B
Choice D
Choice E
Choice C
Choice A

The Dopler Manufacturing Company has two production departments (Assembly and Finishing) and
two service departments (Human Resources and Janitorial). The projected usage of the two service
departments is as follows:

The budgeted costs in the service departments are: Human Resources, $90,000 and Janitorial,
$50,000.

Using the direct method, the amount of Janitorial Department cost allocated to the Finishing
Department is:
$34,157.
$24,843.
$25,000.
$28,947.
$21,053.

Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs
amounted to $300,000 in the production of 20,000 gallons of W and 60,000 gallons of X. Both
products will be processed beyond the split-off point, giving rise to the following data:
The joint cost allocated to W under the net-realizable-value method would be:
None of the other answers are correct.
$84,000.
$90,000.
$75,000.
$80,000.

Rocky Mountain Company produces two products (X and Y) from a joint process. Each product may
be sold at the split-off point or processed further. Additional processing requires no special facilities,
and production costs of further processing are entirely variable and traceable to the products
involved. Joint manufacturing costs for the year were $60,000. Sales values and costs were as
follows:

If the joint production costs are allocated based on the net-realizable-value method, the amount of
joint cost assigned to product Y would be:
None of the other answers are correct.
$40,000.
$20,000.
$33,000.
$27,000.

The Dopler Manufacturing Company has two production departments (Assembly and Finishing) and
two service departments (Human Resources and Janitorial). The projected usage of the two service
departments is as follows:
The budgeted costs in the service departments are: Human Resources, $90,000 and Janitorial,
$50,000.

Using the step-down method and assuming the Human Resources Department is allocated first, the
total amount of service department cost allocated to the Finishing Department is:
$58,947.
$74,000.
$61,158.
$78,842.
$81,053.

Pederson Company has two service departments (Cafeteria and Human Resources) and two
production departments (Machining and Assembly). The number of employees in each department
follows.

Pederson uses the direct method of cost allocation and allocates cost on the basis of employees. If
Human Resources cost amounts to $1,800,000, how much of the department's cost would be
allocated to Assembly?
$900,000.
$720,000.
$1,200,000.
None of the other answers are correct.
$1,080,000.

Which of the following statements about joint-cost allocation is false?

Joint-cost allocation can be based on the number of units produced.
Joint-cost allocation can be accomplished by using several different methods that focus on sales
value and product "worth."
Joint-cost allocation is useful in making a profit determination about individual joint products.
Joint-cost allocation is useful in deciding whether to further process a product after split-off.
Joint-cost allocation is helpful in inventory valuation.

Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint
costs amounted to $80,000 in the production of 20,000 gallons of P and 60,000 gallons of Q. Garage
can sell P and Q at split-off for $2.20 per gallon and $2.60 per gallon, respectively. Alternatively,
both products can be processed beyond the split-off point, as follows:

The joint cost allocated to Q under the relative-sales-value method would be:
None of the other answers are correct.
$64,000.
$40,000.
$65,600.
$62,400.

Seymore Company has two service departments (Cafeteria and Human Resources) and two
production departments (Machining and Assembly). The number of employees in each department
follows.

Seymore uses the step-down method of cost allocation and allocates cost on the basis of
employees. Human Resources cost amounts to $1,200,000, and the department provides more
service to the firm than Cafeteria. How much Human Resources cost would be allocated to
Machining?
$428,572.
$480,000.
None of the other answers are correct.
$444,444.
$0.

The Dollar Store has a Human Resources Department and a Janitorial Department that provide
service to three sales departments. The Human Resources Department cost is allocated on the
basis of employees, and the Janitorial Department cost is allocated on the basis of space. The
following information is available:
Using the direct method, the amount of Janitorial Department cost allocated to Sales Department no.
2 is:
$9,000.
$8,654.
$8,571.
$10,350.
$14,210.

When allocating service department costs, companies should use:

actual costs rather than budgeted costs, and a rate that combines variable and fixed costs.
a rate that is based on matrix theory.
budgeted costs rather than actual costs, and separate rates for variable and fixed costs.
budgeted costs rather than actual costs, and a rate that combines variable and fixed costs.
actual costs rather than budgeted costs, and separate rates for variable and fixed costs.

Seymore Company has two service departments (Cafeteria and Human Resources) and two
production departments (Machining and Assembly). The number of employees in each department
follows.

Seymore uses the step-down method of cost allocation and allocates cost on the basis of
employees. Human Resources cost amounts to $1,200,000, and the department provides more
service to the firm than Cafeteria. How much Human Resources cost would be allocated to
Cafeteria?
None of the other answers are correct.
$28,572.
$88,888.
$0.
$44,444.

Eastside Hospital has two service departments (Patient Records and Accounting) and two
"production" departments (Internal Medicine and Surgery). Which of the following allocations would
likely take place under the reciprocal-services method of cost allocation?
Both Allocation of Accounting cost to Patient Records and Allocation of Patient Records cost to
Internal Medicine.
Allocation of Accounting cost to Patient Records.
Allocation of Surgery cost to Accounting.
Allocation of Patient Records cost to Internal Medicine.
Allocation of Internal Medicine cost to Surgery.

Hreck, Inc. has two service departments (Human Resources and Building Maintenance) and two
production departments (Machining and Assembly). The company allocates Building Maintenance
cost on the basis of square footage and believes that Building Maintenance provides more service
than Human Resources. The square footage occupied by each department follows.

Assuming use of the direct method, over how many square feet would the Building Maintenance cost
be allocated (i.e., spread)?
18,000.
More information is needed to judge.
55,000.
48,000.
66,000.

Which of the following would be considered a service department for an airline?

Information Systems.
Purchasing.
Flight Catering.
Maintenance.
All of the other answers are correct.

Harvest Corporation has two service departments (S1 and S2) and two production departments (P1
and P2), and uses the step-down method of cost allocation. Management has determined that S1
provides more service to the firm than S2, and has decided that the number of employees is the best
allocation base to use for S1. The following data are available:
Which of the following statements is (are) true if S1 and S2 have respective operating costs of
$280,000 and $350,000?
S2 should allocate a total of $390,000 to P1 and P2.
S1's cost should be allocated (i.e., spread) over 140 employees.
Both S1's cost should be allocated (i.e., spread) over 140 employees and S2 should allocate a total
of $390,000 to P1 and P2.
S2 should allocate a portion of its $350,000 cost to S1.
S1's cost should be allocated (i.e., spread) over 150 employees.

Rocky Mountain Company produces two products (X and Y) from a joint process. Each product may
be sold at the split-off point or processed further. Additional processing requires no special facilities,
and production costs of further processing are entirely variable and traceable to the products
involved. Joint manufacturing costs for the year were $60,000. Sales values and costs were as
follows:

If the joint production costs are allocated based on the net-realizable-value method, the amount of
joint cost assigned to product Y would be:
$20,000.
None of the other answers are correct.
$40,000.
$27,000.
$33,000.

Which of the following would be considered a service department for an airline?

Information Systems.
Purchasing.
Flight Catering.
Maintenance.
All of the other answers are correct.

Nash Corporation allocates administrative costs on the basis of staff hours. Short-run monthly usage
and anticipated long-run monthly usage of staff hours for Operating Departments 1 and 2 follow.

Variable and fixed administrative costs total $180,000 and $400,000, respectively. If Nash uses dual-
cost accounting procedures, the total amount of administrative cost to allocate to Department 2
would be:
None of the other answers are correct.
$301,600.
$319,000.
$313,600.
$307,000.

Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint
costs amounted to $80,000 in the production of 20,000 gallons of P and 60,000 gallons of Q. Garage
can sell P and Q at split-off for $2.20 per gallon and $2.60 per gallon, respectively. Alternatively,
both products can be processed beyond the split-off point, as follows:

The joint cost allocated to P under the relative-sales-value method would be:
$17,600.
$24,000.
$25,600.
None of the other answers are correct.
$16,400.

Martina, Inc. has two service departments (Human Resources and Building Maintenance) and two
production departments (Machining and Assembly). The company allocates Building Maintenance
cost on the basis of square footage and believes that Building Maintenance provides more service
than Human Resources. The square footage occupied by each department follows.

Assuming use of the direct method, over how many square feet would the Building Maintenance cost
be allocated (i.e., spread)?
63,000.
19,000.
50,000.
More information is needed to judge.
44,000.
Rocky Mountain Company produces two products (X and Y) from a joint process. Each product may
be sold at the split-off point or processed further. Additional processing requires no special facilities,
and production costs of further processing are entirely variable and traceable to the products
involved. Joint manufacturing costs for the year were $60,000. Sales values and costs were as
follows:

If the joint production costs are allocated based on the physical-units method, the amount of joint
cost assigned to product X would be:
$30,000.
$40,000.
$20,000.
$24,000.
$36,000.

The Dollar Store has a Human Resources Department and a Janitorial Department that provide
service to three sales departments. The Human Resources Department cost is allocated on the
basis of employees, and the Janitorial Department cost is allocated on the basis of space. The
following information is available:

Using the step-down method and assuming the Human Resources Department is allocated first, the
amount of Janitorial cost allocated to Sales Department no. 2 is:
$9,857.
$10,350.
$10,247.
$9,000.
$8,571.

Hreck, Inc. has two service departments (Human Resources and Building Maintenance) and two
production departments (Machining and Assembly). The company allocates Building Maintenance
cost on the basis of square footage and believes that Building Maintenance provides more service
than Human Resources. The square footage occupied by each department follows.
Assuming use of the step-down method, over how many square feet would the Building
Maintenance cost be allocated (i.e., spread)?
66,000.
18,000.
48,000.
More information is needed to judge.
55,000.

Which of the following choices correctly denotes the data needed to allocate joint costs under the
relative-sales-value method?

Choice C
Choice A
Choice E
Choice D
Choice B

Martina, Inc. has two service departments (Human Resources and Building Maintenance) and two
production departments (Machining and Assembly). The company allocates Building Maintenance
cost on the basis of square footage and believes that Building Maintenance provides more service
than Human Resources. The square footage occupied by each department follows.
Assuming use of the step-down method, over how many square feet would the Building
Maintenance cost be allocated (i.e., spread)?
63,000.
44,000.
19,000.
More information is needed to judge.
50,000.

Trackings Corporation has two service departments (Maintenance and Human Resources) and three
production departments (Machining, Assembly, and Finishing). Maintenance is the larger service
department and Assembly is the largest production department. The two service departments
service each other as well as the three producing departments. On the basis of this information,
which of the following cost allocations would notoccur under the direct method?
Maintenance cost would be allocated to Finishing.
Maintenance cost would be allocated to Human Resources.
Both machining cost would be allocated to Assembly and maintenance cost would be allocated to
Human Resources.
Machining cost would be allocated to Assembly.
Human Resources cost would be allocated to Finishing.

Gandolf Corporation allocates administrative costs on the basis of staff hours. Short-run monthly
usage and anticipated long-run monthly usage of staff hours for Operating Departments 1 and 2
follow.

If Gandolf uses dual-cost accounting procedures and variable administrative costs total $200,000,
the amount of variable administrative cost to allocate to Department 1 would be:
$85,000.
None of the other answers are correct.
$90,000.
$100,000.
$80,000

Westside Hospital has two service departments (Patient Records and Accounting) and two
"production" departments (Internal Medicine and Surgery). Which of the following allocations
would not take place under the reciprocal-services method of cost allocation?
Allocation of Accounting cost to Patient Records.
Allocation of Surgery cost to Accounting.
Allocation of Patient Records cost to Internal Medicine.
Both Allocation of Surgery cost to Accounting and Allocation of Internal Medicine cost to Surgery.
Allocation of Internal Medicine cost to Surgery.

Ricardo Corporation has two service departments (Maintenance and Human Resources) and three
production departments (Machining, Assembly, and Finishing). The two service departments service
each other, and studies have shown that Maintenance provides the greater amount of service. Given
the various cost allocation methods, which of the following choices correctly denotes whether
Maintenance cost would be allocated to Human Resources?

Choice C
Choice B
Choice D
Choice E
Choice A

Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs
amounted to $300,000 in the production of 20,000 gallons of W and 60,000 gallons of X. Both
products will be processed beyond the split-off point, giving rise to the following data:

The joint cost allocated to W under the net-realizable-value method would be:
$84,000.
$90,000.
None of the other answers are correct.
$80,000.
$75,000.

Trackings Corporation has two service departments (Maintenance and Human Resources) and three
production departments (Machining, Assembly, and Finishing). Maintenance is the larger service
department and Assembly is the largest production department. The two service departments
service each other as well as the three producing departments. On the basis of this information,
which of the following cost allocations would notoccur under the direct method?
Maintenance cost would be allocated to Human Resources.
Machining cost would be allocated to Assembly.
Both machining cost would be allocated to Assembly and maintenance cost would be allocated to
Human Resources.
Maintenance cost would be allocated to Finishing.
Human Resources cost would be allocated to Finishing.

When allocating service department costs, companies should use:

budgeted costs rather than actual costs, and separate rates for variable and fixed costs.
budgeted costs rather than actual costs, and a rate that combines variable and fixed costs.
actual costs rather than budgeted costs, and a rate that combines variable and fixed costs.
actual costs rather than budgeted costs, and separate rates for variable and fixed costs.
a rate that is based on matrix theory.

Pederson Company has two service departments (Cafeteria and Human Resources) and two
production departments (Machining and Assembly). The number of employees in each department
follows.

Pederson uses the direct method of cost allocation and allocates cost on the basis of employees. If
Human Resources cost amounts to $1,800,000, how much of the department's cost would be
allocated to Assembly?
$720,000.
$1,080,000.
$900,000.
None of the other answers are correct.
$1,200,000.

When allocating joint costs, Weinberg calculates the final sales value of the various products
manufactured and subtracts appropriate separable costs. The company is using the:
gross margin at split-off method.
physical-units method.
net-realizable-value method.
relative-sales-value method.
reciprocal-accounting method.

Which of the following methods would be of little use when allocating service department costs to
production departments?
The net-realizable-value method.
The step-down method.
The direct method.
The reciprocal method.
The dual-cost allocation method.

Romano Corporation allocates administrative costs on the basis of staff hours. Short-run monthly
usage and anticipated long-run monthly usage of staff hours for Operating Departments 1 and 2
follow.

If Romano uses dual-cost accounting procedures and fixed administrative costs total $1,000,000, the
amount of fixed administrative cost to allocate to Department 1 would be:
$500,000.
None of the other answers are correct.
$400,000.
$850,000.
$450,000.

Rocky Mountain Company produces two products (X and Y) from a joint process. Each product may
be sold at the split-off point or processed further. Additional processing requires no special facilities,
and production costs of further processing are entirely variable and traceable to the products
involved. Joint manufacturing costs for the year were $60,000. Sales values and costs were as
follows:

If the joint production costs are allocated based on the net-realizable-value method, the amount of
joint cost assigned to product Y would be:
$33,000.
$20,000.
None of the other answers are correct.
$40,000.
$27,000.

Martina, Inc. has two service departments (Human Resources and Building Maintenance) and two
production departments (Machining and Assembly). The company allocates Building Maintenance
cost on the basis of square footage and believes that Building Maintenance provides more service
than Human Resources. The square footage occupied by each department follows.

Assuming use of the step-down method, over how many square feet would the Building
Maintenance cost be allocated (i.e., spread)?
More information is needed to judge.
50,000.
44,000.
19,000.
63,000

Which of the following statements about joint-cost allocation is false?

Joint-cost allocation can be accomplished by using several different methods that focus on sales
value and product "worth."
Joint-cost allocation is useful in deciding whether to further process a product after split-off.
Joint-cost allocation is helpful in inventory valuation.
Joint-cost allocation is useful in making a profit determination about individual joint products.
Joint-cost allocation can be based on the number of units produced.

Zena Company manufactures two products (A and B) from a joint process that cost $200,000 for the
year just ended. Each product may be sold at the split-off point or processed further. Additional
processing requires no special facilities, and production costs of further processing are entirely
variable and traceable to the products involved. Further information follows.

If the joint costs are allocated based on the physical-units method, the amount of joint cost assigned
to product A would be:
None of the other answers are correct.
$120,000.
$104,000.
$100,000.
$80,000.

Pederson Company has two service departments (Cafeteria and Human Resources) and two
production departments (Machining and Assembly). The number of employees in each department
follows.
Pederson uses the direct method of cost allocation and allocates cost on the basis of employees. If
Human Resources cost amounts to $1,800,000, how much of the department's cost would be
allocated to Machining?
$720,000.
None of the other answers are correct.
$900,000.
$1,200,000.
$600,000.

Rocky Mountain Company produces two products (X and Y) from a joint process. Each product may
be sold at the split-off point or processed further. Additional processing requires no special facilities,
and production costs of further processing are entirely variable and traceable to the products
involved. Joint manufacturing costs for the year were $60,000. Sales values and costs were as
follows:

If the joint production costs are allocated based on the relative-sales-value method, the amount of
joint cost assigned to product X would be:
$20,000.
None of the other answers are correct.
$27,000.
$33,000.
$40,000.

Herbster manufactures A, B, and C, all of which are joint products, and D, which is classified as a
by-product. If joint manufacturing costs amount to $450,000 and the company is using a popular
accounting method, the firm will:
decrease $450,000 by the net realizable value of D and then allocate the total among A, B, and C.
allocate $450,000 among A, B, and C.
decrease $450,000 by the net realizable value of D and then allocate the total among A, B, C, and
D.
increase $450,000 by the net realizable value of D and then allocate the total among A, B, and C.
allocate $450,000 among A, B, C, and D.