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Managerial Accounting 1B
Financial and Managerial Accounting Chapter 22 1. Exercise 22-1 Departmental expense allocations L.O. C1 Won Han Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

 Indirect Expense Cost Allocation Base Supervision \$ 75,000 Number of employees Utilities 60,000 Square feet occupied Insurance 16,500 Value of assets in use Total \$ 151,500

Departmental data for the company s recent reporting period follow.

 Department Employees Square Feet Asset Values Materials 18 27,000 \$ 6,000 Personnel 6 4,500 1,200 Manufacturing 66 45,000 37,800 Packaging 30 13,500 15,000 Total 120 90,000 \$ 60,000

1. Use this information to allocate each of the three indirect expenses across the four departments.
(Omit the “\$” & “%” signs in your response.) 2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.
(Omit the “\$” sign in your response.) Exercise 22-12B Joint real estate costs assigned L.O. C4 Tidy Home Properties is developing a subdivision that includes 300 home lots. The 225 lots in the Garden section are below a ridge and do not have views of the neighboring gardens and hills; the 75 lots in the Premier section offer unobstructed views. The expected selling price for each Garden lot is \$50,000 and for each Premier lot is \$100,000. The developer acquired the land for \$2,500,000 and spent another \$2,000,000 on street and utilities improvements. Assign the joint land and improvement costs to the lots using the value basis of allocation and determine the average cost per lot.
(Omit the “\$” sign in your response.) Exercise 22-13B Joint product costs assigned L.O. C4 [The following information applies to the questions displayed below.] Pike Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for \$20 per pound and the flakes for \$15 per pound. On average, 100 pounds of lobster are processed into 57 pounds of tails and 24 pounds of flakes, with 19 pounds of waste. Assume that the company purchased 3,000 pounds of lobster for \$6.00 per pound and processed the lobsters with an additional labor cost of \$1,800. No materials or labor costs are assigned to the waste. The company sold 1,510 pounds of tails and 710 pounds of flakes. 1. What is the allocated cost of the sold items? The company allocates joint costs on a value basis.
(Round your cost per pound to 2 decimal places. Omit the “\$” sign in your response.) Cost of goods sold Lobster tails Lobster flakes Exercise 22-13B Part 2 2. What is the allocated cost of the ending inventory? The company allocates joint costs on a value basis.
(Round your cost per pound to 2 decimal places. Omit the “\$” sign in your response.) Cost of the ending inventory Lobster tails Lobster flakes Problem 22-1A Allocation of building occupancy costs to departments L.O. P1 [The following information applies to the questions displayed below.] City Bank has several departments that occupy both floors of a two-story building. The departmental accounting system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow.

 Depreciation Building \$ 18,000 Interest Building mortgage 27,000 Taxes Building and land 8,000 Gas (heating) expense 2,500 Lighting expense 3,000 Maintenance expense 5,500 Total occupancy cost \$ 64,000

The building has 4,000 square feet on each floor. In prior periods, the accounting manager merely divided the \$64,000 occupancy cost by 8,000 square feet to find an average cost of \$8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupied. Laura Diaz manages a first-floor department that occupies 1,000 square feet, and Lauren Wright manages a second-floor department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second-floor manager questions whether using the same rate per square foot for all departments makes sense because the first-floor space is more valuable. This manager also references a recent real estate study of average local rental costs for similar space that shows first-floor space worth \$30 per square foot and second-floor space worth \$20 per square foot (excluding costs for heating, lighting, and maintenance). Problem 22-1A Part 1 Required: Allocate occupancy costs to the Diaz and Wright departments using the current allocation method.

 Department Total Diazs Dept. Wright’s Dept.

6.Problem 22-1A Part 2 Allocate the depreciation, interest, and taxes occupancy costs to the Diaz and Wright departments in proportion to the relative market values of the floor space. Allocate the heating, lighting, and maintenance costs to the Diaz and Wright departments in proportion to the square feet occupied (ignoring floor space market values).