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Support Department Cost Allocation Johnson Company produced chemical products. Janitorial and maintenance support department costs are allocated to the mixing and blending production departments based on square footage (janitorial) and machine hours (maintenance), respectively. Relevant department data is as follows: Janitorial Maintenance Mixing Blending Department $18,000 Cost $12,000 $52,000 $63,000 Square footage 1,000 3,000 Machine Hours 500 1,000 Using the direct method of support department cost allocation, determine the total cost of the Mixing and Blending departments after allocating all support costs to the production departments. Joint Cost Allocation Anderson Company makes three types of paint products: base, primer and paint. All products go through a joint mixing process which produces 8,000 gallons of base, 6,000 gallons of primer and 4,000 gallons of paint at a joint cost of $10,000. In addition, the mixing process for primer is two times longer than for base, and the mixing process for paint is three times longer than for base. 1. Allocate the joint cost of production of $10,000 to each product using the weighted average method. 2. Assuming the market price at the split of point for base is $3 per gallon, primer is $4 per gallon and paint is $8 per gallon, use the market value at split-off to allocate the $10,000 of joint production costs. 3. Analyze the differences in the methods used in #1 and #2 above. What are the reasons for the difference? When would each method be most appropriate to use?

Support Department Cost Allocation Johnson Company produced chemical products. Janitorial and maintenance support department costs are allocated to the mixing and blending production departments based on square footage (janitorial) and machine hours (maintenance), respectively. Relevant department data is as follows: Janitorial Maintenance Mixing Blending Department $18,000 Cost $12,000 $52,000 $63,000 Square footage 1,000 3,000 Machine Hours 500 1,000 Using the direct method of support department cost allocation, determine the total cost of the Mixing and Blending departments after allocating all support costs to the production departments. Joint Cost Allocation Anderson Company makes three types of paint products: base, primer and paint. All products go through a joint mixing process which produces 8,000 gallons of base, 6,000 gallons of primer and 4,000 gallons of paint at a joint cost of $10,000. In addition, the mixing process for primer is two times longer than for base, and the mixing process for paint is three times longer than for base. 1. Allocate the joint cost of production of $10,000 to each product using the weighted average method. 2. Assuming the market price at the split of point for base is $3 per gallon, primer is $4 per gallon and paint is $8 per gallon, use the market value at split-off to allocate the $10,000 of joint production costs. 3. Analyze the differences in the methods used in #1 and #2 above. What are the reasons for the difference? When would each method be most appropriate to use?

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 10E: Support department cost allocation comparison Refer to your answers to Exercises 7-9. Compare the...
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Can you please assist with questions 1-3? Thank you. 

Support Department Cost Allocation Johnson Company produced chemical products. Janitorial and maintenance support department costs are allocated to the mixing and blending production departments based on square footage (janitorial) and machine hours (maintenance), respectively. Relevant department data is as follows: Janitorial Maintenance Mixing Blending Department $18,000 Cost $12,000 $52,000 $63,000 Square footage 1,000 3,000 Machine Hours 500 1,000 Using the direct method of support department cost allocation, determine the total cost of the Mixing and Blending departments after allocating all support costs to the production departments. Joint Cost Allocation Anderson Company makes three types of paint products: base, primer and paint. All products go through a joint mixing process which produces 8,000 gallons of base, 6,000 gallons of primer and 4,000 gallons of paint at a joint cost of $10,000. In addition, the mixing process for primer is two times longer than for base, and the mixing process for paint is three times longer than for base. 1. Allocate the joint cost of production of $10,000 to each product using the weighted average method. 2. Assuming the market price at the split of point for base is $3 per gallon, primer is $4 per gallon and paint is $8 per gallon, use the market value at split-off to allocate the $10,000 of joint production costs. 3. Analyze the differences in the methods used in #1 and #2 above. What are the reasons for the difference? When would each method be most appropriate to use?
Transcribed Image Text:Support Department Cost Allocation Johnson Company produced chemical products. Janitorial and maintenance support department costs are allocated to the mixing and blending production departments based on square footage (janitorial) and machine hours (maintenance), respectively. Relevant department data is as follows: Janitorial Maintenance Mixing Blending Department $18,000 Cost $12,000 $52,000 $63,000 Square footage 1,000 3,000 Machine Hours 500 1,000 Using the direct method of support department cost allocation, determine the total cost of the Mixing and Blending departments after allocating all support costs to the production departments. Joint Cost Allocation Anderson Company makes three types of paint products: base, primer and paint. All products go through a joint mixing process which produces 8,000 gallons of base, 6,000 gallons of primer and 4,000 gallons of paint at a joint cost of $10,000. In addition, the mixing process for primer is two times longer than for base, and the mixing process for paint is three times longer than for base. 1. Allocate the joint cost of production of $10,000 to each product using the weighted average method. 2. Assuming the market price at the split of point for base is $3 per gallon, primer is $4 per gallon and paint is $8 per gallon, use the market value at split-off to allocate the $10,000 of joint production costs. 3. Analyze the differences in the methods used in #1 and #2 above. What are the reasons for the difference? When would each method be most appropriate to use?
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