Q1. Allocate the support department cost to operating department using Direct Method. The information for the recent period is as follows:

	Support Department		Operating Department
	Administration	Housekeeping	Medical	Dental	Total
Cost	32,400	48,600	127,000	106,000	314,000

Possible Allocation Bases:

	Support Department		Operating Department
	Administration	Housekeeping	Medical	Dental	Total
No. of Employees	2	2	5	3	12
Square Feet	900	100	8,000	1,000	10,000

Administration Cost will be allocated using number of employees and Housekeeping cost will be allocated using square feet.

Q2. Explain the three methods to allocate support department costs to operating departments.

Q3. Describe the split-off point and explain its significance for joint product costing. Methods to allocate joint costs often require use of estimates. Which of the following two methods is likely to involve the most uncertainty? Explain.

a. Physical output method

b. Net realizable value

Q4. Distinguish between support department costs and manufacturing overhead costs.

Q5. Why would managers want to develop and monitor standards for expected contribution margins?

Answer rating: 100% (QA)

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