Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base. : The allocation of fixed administrative expenses among the three restaurants for this year.

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Answer 1

Question

Chapter 11, Problem 10E

1.

To determine

Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

:

The allocation of fixed administrative expenses among the three restaurants for this year.

2.

To determine

There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

:

The change in each restaurant’s allocated costs from last year to this year.

3.

To determine

A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

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15 es [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $77 per unit in two geographic regions-East and West. The following information pertains to the company's first year of operations in which it produced 59,000 units and sold 54,000 units. Variable costs per unit: Manufacturing: Direct materials. Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $27 $ 10 $2 $3 The company sold 41,000 units in the East region and 13,000 units in the West region. It determined that $330,000 of its fixed selling and administrative expense is traceable to the West region, $280,000 is traceable to the East region, and the remaining $52,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of…

EXERCISE 6–4 Basic Segmented Income Statement LO6-4 Roval Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow $7.50 Selling price per unit Variable expenses per unit $6.00 $2.40 $5.25 $45,000 $21,000 Traceable fixed expenses per year

Departmental Cost Allocation Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and P2). The distribution of each service depart- ment's efforts (in percentages) to the other departments is: To From S1 S2 P1 P2 S1 10% 20% ?% S2 10% 30 The direct operating costs of the departments (including both variable and fixed costs) are: S1 $180,000 S2 60,000 P1 50,000 P2 120,000 Required 1. Determine the total cost of P1 and P2 using the direct method. 2. Determine the total cost of P1 and P2 using the step method. 3. Determine the total cost of P1 and P2 using the reciprocal method.

Answer 2

Question

Chapter 11, Problem 10E

1.

To determine

Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

:

The allocation of fixed administrative expenses among the three restaurants for this year.

2.

To determine

There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

:

The change in each restaurant’s allocated costs from last year to this year.

3.

To determine

A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

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Answer 3

Question

Chapter 11, Problem 10E

1.

To determine

Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

:

The allocation of fixed administrative expenses among the three restaurants for this year.

2.

To determine

There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

:

The change in each restaurant’s allocated costs from last year to this year.

3.

To determine

A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

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Answer 4

Question

Chapter 11, Problem 10E

1.

To determine

Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

:

The allocation of fixed administrative expenses among the three restaurants for this year.

2.

To determine

There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

:

The change in each restaurant’s allocated costs from last year to this year.

3.

To determine

A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

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Answer 5

Chapter 11, Problem 10E

1.

To determine

Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

:

The allocation of fixed administrative expenses among the three restaurants for this year.

2.

To determine

There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

:

The change in each restaurant’s allocated costs from last year to this year.

3.

To determine

A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

Answer 6

Chapter 11, Problem 10E

1.

To determine

Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

:

The allocation of fixed administrative expenses among the three restaurants for this year.

Answer 7

Chapter 11, Problem 10E

1.

To determine

Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

:

The allocation of fixed administrative expenses among the three restaurants for this year.

Answer 8

2.

To determine

There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

:

The change in each restaurant’s allocated costs from last year to this year.

Answer 9

2.

To determine

There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

:

The change in each restaurant’s allocated costs from last year to this year.

Answer 10

3.

To determine

A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

Answer 11

3.

To determine

A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 11 - Prob. 1Q Ch. 11 - Prob. 2Q Ch. 11 - Prob. 3Q Ch. 11 - Prob. 4Q Ch. 11 - Prob. 5Q Ch. 11 - Prob. 6Q Ch. 11 - Prob. 7Q Ch. 11 - Prob. 8Q Ch. 11 - Prob. 9Q Ch. 11 - Prob. 10Q

Solution Summary: The author explains that cost allocation is the process of assigning or allocating indirect costs to every unit using a predetermined overhead rate.

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