FELLOWSHIP BAPTIST COLLEGE

COLLEGE OF BUSINESS AND ACCOUNTANCY

Bachelor of Science in Accountancy

Subject Code: ________

Subject Title: Valuation
Term: Final
Google Classroom Access Code: __________________
Consultation time: Wednesday (2:00-5:00)
Contact Information of the Instructor/s: FB/Messenger: Sam Parreno
Phone: 09289027935
Email: miessy.parreno@gmail.com

LECTURE GUIDE

1. The following data are for Billings Stores, which has two stores and one service center.
East West
------- -----
Percentage of services used in current year 20% 80%
Expected long-term use of services 30% 70%

Budgeted central purchasing costs were P225,000 fixed and P125,000 variable. Actual fixed costs
were P240,000 and actual variable costs were P115,000. The managers wish to allocate the actual
central purchasing costs to the stores based on actual use of the central purchasing service.

a. Compute the allocation to the East store.

b. Compute the allocation to the West store.

2. The following data are for Billings Stores, which has two stores and one service center.
East West
------- -----
Percentage of services used in current year 20% 80%
Expected long-term use of services 30% 70%

Budgeted central purchasing costs were P225,000 fixed and P125,000 variable. Actual fixed costs
were P240,000 and actual variable costs were P115,000. The company wishes to allocate the
budgeted variable costs of the central purchasing unit based on actual use of the unit's services and
to allocate budgeted fixed costs based on expected long-term use of the unit's services.

a. Compute the total cost allocated to the East store for the services of the central purchasing unit.

b. Compute the total cost allocated to the West store for the services of the central purchasing unit.

3. Following are data about Peace Co.'s two service departments and two operating departments.
Service Depts. Operating Depts.
-------------- ---------------
A B X Y
------- ------ ------ ------
Direct costs P200 P500 P1,500 P2,000
Services performed by Dept. A 20% 40% 40%
Services performed by Dept. B. 10% 90% -

a. Peace allocates costs of its service departments using the direct method of allocation. Find the

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 total cost that will be allocated to Dept. X.

b. Peace allocates the costs of its service departments using the step-down method, beginning with
Dept. A. Find the total amount of cost that will be allocated to Dept. X.

4. Following are data about Peace Co.'s two service departments and two operating departments.
Service Depts. Operating Depts.
-------------- ---------------
A B X Y
------- ------ ------ ------
Direct costs P200 P500 P1,500 P2,000
Services performed by Dept. A 20% 40% 40%
Services performed by Dept. B. 10% 90% -

Peace allocates costs of its service departments using the reciprocal method of allocation. Find the
total cost that will be allocated to Dept. X.

5. The following data are for Lexington Stores, which has two stores and one service center.
Concord Graham
------- ------
Percentage of services used in current year 40% 60%
Expected long-term use of services 30% 70%

Budgeted central purchasing costs were P100,000 fixed and P75,000 variable. Actual fixed costs
were P140,000 and actual variable costs were P105,000. The managers wish to allocate the actual
central purchasing costs to the stores based on actual use of the central purchasing service.

a. Compute the allocation to the Concord store.

b. Compute the allocation to the Graham store.

6. The following data are for Lexington Stores, which has two stores and one service center.
Concord Graham
------- ------
Percentage of services used in current year 40% 60%
Expected long-term use of services 30% 70%

Budgeted central purchasing costs were P100,000 fixed and P75,000 variable. Actual fixed costs
were P140,000 and actual variable costs were P105,000. The company wishes to allocate the
budgeted variable costs of the central purchasing unit based on actual use of the unit's services and
to allocate budgeted fixed costs based on expected long-term use of the unit's services.

a. Compute the total cost allocated to the Concord store for the services of the central purchasing
unit.

b. Compute the total cost allocated to the Graham store for the services of the central purchasing
unit.

7. Following are data about Hope Co.'s two service departments and two operating departments.
Service Depts. Operating Depts.
-------------- ---------------
A B X Y
------- ------ ------ ------
Direct costs P400 P600 P2,000 P3,000

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 Services performed by Dept. A 30% 30% 40%
Services performed by Dept. B. 20% 70% 10%

a. Hope allocates costs of its service departments using the direct method of allocation. Find the
total cost that will be allocated to each of the operating departments.

b. Hope allocates the costs of its service departments using the step-down method, beginning with
Dept. A. Find the total amount of cost that will be allocated to each of the operating departments.

c. Hope allocates costs of its service departments using the reciprocal method of allocation. Find
the total cost that will be allocated to each of the operating departments.

8. Following are data about Prosper Co.'s two service departments and three operating departments.
Service Depts. Operating Depts.
-------------- ----------------------
A B X Y Z
------- ------ ------ ------ ------
Direct costs P400 P600
Services performed by Dept. A 30% 40% 20% 10%
Services performed by Dept. B. 40% 20% 20% 20%

Prosper allocates costs of its service departments using the reciprocal method of allocation. Find the
total costs that will be allocated to each of the operating departments.

9. Following are data about Ascend Co.'s three service departments and two operating departments.
Service Depts. Operating Depts.
--------------------- ----------------
A B C X Y
------- ------ ------ ------ ------
Direct costs P150 P300 P350
Services performed by Dept. A 20% 30% 40% 10%
Services performed by Dept. B. 10% 20% 50% 20%
Services performed by Dept. C 30% 40% 15% 15%

a. Ascend allocates costs of its service departments using the direct method of allocation. Find the
total cost that will be allocated to Dept. X.

b. Ascend allocates the costs of its service departments using the step-down method, beginning
with Dept. A followed by Dept. B. Find the total amount of cost that will be allocated to Dept. X.

10. Progress Company had the following results in June.

Planned Actual
-------- --------
Sales P160,000 P162,500
Variable costs at P5 per unit 100,000 102,500
-------- --------
Contribution margin P 60,000 P 60,000
======== ========

Planned sales were 20,000 units, actual sales were 20,500 units.

a. Find the sales price variance. Indicate F or U

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b. Find the sales volume variance. Indicate F or U

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