Question

1. A factory uses the sequential method to allocate support department costs. Job 23 required 50 machine hours in the Cutting Department and 10 direct labor hours in the Assembly Department. Total direct materials cost was $1,500, and total direct labor cost was $200. If the overhead rate of the Cutting Department is $4.5 per machine hour and the Assembly Department is $5.5 per direct labor hour, calculate the cost of Job 23.

a. $2,000

b. $1,700

c. $1,980

d. $1,925

2. Milky, Inc., manufactures dairy products. A joint process uses 100,000 pounds of milk and yields 5,000 pounds of cream and 4,000 pounds of cheese. The price at split-off of cream is $4 per pound and cheese is $8 per pound. If the joint cost is $45,000, allocate the joint costs to the cream and cheese using the sales-value-at-split-off method. (Round off the percent calculation to two decimal places.)

a.The joint cost allocated to cream is $20,000 and to cheese is $25,000.

b.The joint cost allocated to cream is $17,100 and to cheese is $27,900.

c.The joint cost allocated to cream is $12,500 and to cheese is $32,500.

d.The joint cost allocated to cream is $22,500 and to cheese is $22,500.

Answer 1

1) Calculate total cost of job 23

Direct material	1500
Direct labour	200
Overhead (50*4.5+10*5.5)	280
Total Cost of job 23	1980

So answer is c) 1980

2) Sale value of cream = 5000*4 = 20000

Cheese = 4000*8 = 32000

Allocation ratio : cream = 20000/52000 = .38; Cheese = 32000/52000 = .61

Allocated joint cost

Cream = 45000*.38 = 17100

Cheese = 45000*.61 = 27900

So answer is b) .The joint cost allocated to cream is $17,100 and to cheese is $27,900.