PROBLEM 1 (35%)

Tristar Manufacturing produces two types of battery-operated toy soldiers : Infantry and
special forces. The soldiers are produced by using one continuous process. Four
activities identified : machining, setups, receiving, and packaging. Resources drivers
have been used to assign costs to each activity. The overhead activities, their costs, and
the other related data are as follows :
Product Machine Setups Receiving Packing
Hours Orders Orders
Infantry 20,000 300 900 1,600
Special 20,000 100 100 800
forces
Costs $80,000 $24,000 $18,000 $30,000

Required :
1. Calculate the total overhead assigned to each product by using only machine
hours to calculate plantwide
2. Calculate consumption ratios for each activity
3. Calculate a rate for each activity by using the associated driver
4. Assign the overhead costs to each product by using the activity rates computed in
requirement 3.
5. Comment the different between the assignment in requirement 1 and the activity
based assignment.
PROBLEM 2 (30%)
Granny's Nut Co. operates with three producing departments (Cutting, Dividing, and
Shelling that are serviced by two service departments Equipment Maintenance and
General Plant). Costs are allocated using the step method with the service department
servicing the greatest number of other departments allocated first. General Plant is
allocated on the basis of square footage and Equipment Maintenance is allocated on the
basis of direct labor hours. Relevant May data are:

Producing Departments Service Departments

Equipment General
Cutting Dividing Shelling Maintenance Plant
Overhead before
 allocation of service
department costs........................$105,000 $93,000 $87,000 $56,000 $30,000
Square footage................................ 8,000 12,000 6,000 4,000
Machine hours used........................ 6,000 2,000 7,000 --
Direct labor used............................. 5,000 6,000 9,000 --

Required: Prepare a schedule indicating the allocation of service department costs to

producing departments and the rate per machine hour for applying overhead in each
producing department. (Round 2 digits behind the comma.)

PROBLEM 3 (35%)

Harry Corp. manufactures Products J, K, L, and M from a joint process. Additional

information is as follows:

Market If Processed Further

Units Value at Additional Market

Product Produced Split-Off Costs Value

J 6,000 $ 80,000 $ 7,500 $ 90,000

K 5,000 60,000 6,000 70,000

L 4,000 40,000 4,000 50,000

M 3,000 20,000 2,500 30,000

18,000 $ 200,000 $ 20,000 $ 240,000

Assuming that total joint costs of $160,000 were allocated using the market value salable
split-off approach and not salable at split-off point, what joint costs were allocated to each
product?

$$$$$ GOOD LUCK & GOD BLESS @@@@