Accounting 4210, Practice Exam 1 Solution Name______________ Section___
Instructions: You have 75 minutes to complete 11 questions on this exam. The 10 multiple choice questions are worth 4 points each. a. Credit will only be given for clearly circling one of the four options. The workout questions are worth a total of 60 points. a. Credit will only be given if you clearly show your work, and clearly indicate the final answer. Good luck!
1. SuperFine Restaurant Supply Company reported the following information for the year just ended. Estimated Actual Units sold 1,000 1,100 Direct labor hours 2,000 2,050
Sales Revenue $140,000 $145,000 Direct materials cost 30,000 31,000 Direct labor cost 20,000 22,000 Manufacturing overhead cost…show more content… What is the amount of maintenance that would be allocated to the machining department, assuming Hampton uses the step-down method (starting with Supervision, then Maintenance) to allocate the costs of service departments?
A) $252,000 B) $378,000 C) $226,800 D) $240,000
The correct answer is $252,000.
The amount of Supervision’s costs allocated to Maintenance = $120,000 * 15% = $18,000. Maintenance department’s costs to be allocated now equal $378,000 ($360,000 + $18,000).
The amount of Maintenance’s costs allocated to machinery = $378,000 * (.6 / .9) = $252,000.
9. What is the amount of supervision that would be allocated to the machining department, assuming Hampton uses the direct-method to allocate the costs of service departments (round to the nearest dollar)? A) 72,000 B) 80,000 C) 90,000 D) 84,705
The correct answer is $84,705.88.
$120,000 * (.6 / .85) = $84,705.88
10. Using the reciprocal method, how much of the Supervision Department’s costs would be allocated to the Assembly Department? A) 39,594 B) 285,686 C) 51,000 D) 38,653 The correct answer is $39,593.91.
