Question

At the Spring Valley​ Company, the cost of the personnel department has always been charged to production departments based upon number of employees.​ Recently, opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs.

Total personnel department costs are $290,000.
Department
A
B
C
Number of employees
65
260
250
Number of new hires
20
18
14
If the number of employees is considered the cost​ driver, what amount of personnel costs will be allocated to Department​ A? (Round any intermediary calculations two decimal places and your final answer to the nearest​ dollar.)
A.
$31,900
B.
$39,314
C.
$131,130
D.
$9,250

Electro Corp sells a refrigerator and a freezer as a single package for $1,160. Other data are in the chart below.
Refrigerator
Full−size Freezer
Packaged Price
Selling price
$880
$480
$1,160
Manufacturing cost per unit
$700
$220
Stand−alone product revenues
$1,350,000
$980,000
Using the stand−alone method with selling price as the weight for revenue​ allocation, what amount will be allocated to the​ refrigerator? (Do not round any intermediary​ calculations.)
A.
$880.00
B.
$409.41
C.
$750.59
D.
$580.00

The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $15,000,000 bond​ issuance, the Electric Mixer Division used $9,200,000 and the Electric Lamp Division used $5,800,000 for expansion. Interest costs on the bond totaled $975,000 for the year. What amount of interest costs should be allocated to the Electric Mixer​ Division? (Round any intermediary calculations two decimal places and your final answer to the nearest​ dollar.)
A.
$594,750
B.
$9,200,000
C.
$5,800,000
D.
$604,339

Goldfarb's Book and Music Store has two service​ departments, Warehouse and Data Center. Warehouse Department costs of $390,000are allocated on the basis of budgeted warehouse−hours. Data Center Department costs of $170,000 are allocated based on the number of computer log−on hours. The costs of operating departments Music and Books are $140,000 and $168,000​, respectively. Data on budgeted warehouse−hours and number of computer log−on hours are as​ follows:
                                                                                                                        
Support Departments
Production Departments
Warehouse Department
Data Center Department
Music
Books
Budgeted costs
$390,000
$170,000
$140,000
$168,000
Budgeted warehouse−hours
NA
590
1,060
1,510
Number of computer hours
280
NA
800
1,090
Using the step−down ​method, what amount of Data Center Department cost will be allocated to the Warehouse Department if the service department with the highest percentage of interdepartmental support service is allocated​ first? (Round​ up)
A.
​$0
B.
$170,000
C.
$21,935
D.
$60,788
Click to select your answer.

Quantum Company uses the high−low method to estimate the cost function. The information for 2017 is provided​ below:
Machine−hours
Labor Costs
Highest observation of cost driver
600
$36,000
Lowest observation of cost driver
400
$26,000
  
What is the slope​ coefficient?
A.
$50.00
B.
$65.00
C.
$62.00
D.
$60.00

The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $16,000,000 bond​ issuance, the Electric Mixer Division used $9,100,000 and the Electric Lamp Division used $6,900,000 for expansion. Interest costs on the bond totaled $1,000,000 for the year.
The above interest costs would be considered​ a(n):
A.
facility−sustaining cost
B.
product−sustaining cost
C.
batch−level cost
D.
output unit−level cost

Answer 1

1) At the spring valley company :

The amount of personnel costs will be allocated to Department​ A =

(B) $ 39314

Working :

Total number of employees :

  

	A	B	C	Total
Number Of employees	65	260	250	575
Number of new hires	20	18	14	52
Total	85	278	264	627

Personnal cost = $ 290000

for department A = 290000 * 85 / 627 = 39314

2) Electro Corp

   The amount will be allocated to the​ refrigerator : (C) $ 750.59

Working : Packaged price = $1160

Refrigerator	880
Freezer	480
Total	1360

Refrigerator = $ 1160 * 880 / 1360 = $ 750.59

3) The Conity Corporation

The amount of interest costs should be allocated to the Electric Mixer​ Division = (A) $ 594750

Working :

Electric mixer divison (%) = 9200000 * 100 / 15000000 = 61%

Interest costs = $ 975000

Amount to be allocated to electric mixer divison = 975000 * 61 % = 594750