Problem 1

Nokia Inc. has two user departments, Wireless Communications & Digital Communications. The two support departments are Technical Support (TS) & Research & Development (R&D). The costs incurred in each of these departments are as follows:

Wireless Communications	$110,000
Digital Communications	$60,000
TS	$80,000
R&D	$90,000

The actual level of support is as follows:

Supplied by	Used by
	TS	R&D	Wireless	Digital
TS		20%	50%	30%
R&D	30%		25%	45%

Determine the cost allocated to:

Wireless Communications using the direct method

Digital Communications using the direct method

Wireless Communications using the step-down method (allocating TS first)

Wireless Communications using the step-down method (allocating R&D first)

Wireless Communications using the reciprocal method

Digital Communications using the reciprocal method

Problem 2

Caldwell Company produces three varieties of iron ore, X, Y, & Z from a joint processing of raw mineral iron. The amount of each product produced in the first quarter of 2001 is 50,000 pounds, 150,000 pounds, and 300,000 pounds respectively. The selling price of each product per pound is $10, $7 & $3 respectively. The joint processing cost is $800,000. The separable processing costs for each product is $40,000, $60,000 and $20,000 respectively.

Determine the following:

Joint cost allocated to each product X, Y, & Z using the physical volume method, relative sales value method, and net realizable value method.

The unit cost of each product using the net realizable value method.