Fundamentals of Cost and Management Accounting Assignment

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Fundamentals of Cost and Management Accounting
Part Four: Allocation of Support Department Costs, Common Costs and Revenues Exercise No. 4
الاسم: الرقم الأكاديمي: رقم الشعبة: Choose the best answer for every question of the following questions: 1) Max's Movie Store encounters revenue-allocation decisions with its bundled product sales. Here, two or more of the movie videos are sold as a single package. Managers at Max's are keenly interested in individual product-profitability figures. Information pertaining to its three bundled products and the stand-alone selling prices of its individual products is as follows:

| Stand-Alone Selling Price,| Cost| | Package| Packaged Price| New Releases| $15| $2.00| | New & Older| $20|
Older Releases| $10| $1.50| | New & Classics| $17| Classics| $8| $1.25| | All three| $25|

Required:
a.With selling prices as the weights, allocate the $25 packaged price of "All Three" to the three videos using the stand-alone revenue-allocation method.

b.Allocate the $25 packaged price of "All Three" to the three types of videos using the incremental revenue-allocation method. Assume New Releases is the primary product, followed by Older Releases, and then Classics.

Answer:
a.New $15 + Older $10 + Classics $8= $33.00

New $15 / $33 × $25= $11.36
Old $10 / $33 × $25= $ 7.58
Classics $8 / $33 × $25= $ 6.06
Total$25.00

b.
Product| Revenue Allocated| Revenue Remaining To Be Allocated| New Releases| $15| $25 - $15 = $10|
Older Releases| $5 ($20-$15)| $25-$15-$5 = $5|
Classics| $5 ($25-$20)| none|
Total revenue allocated| $25| |

2) Software For You encounters revenue-allocation decisions with its bundled product sales. Here, two or more units of the software are sold as a single package. Managers at Software For You are keenly interested in individual product-profitability figures. Information pertaining to its three bundled products and the stand-alone selling prices of its individual products is as follows:

| Stand-Alone Selling Price,| Cost| | Package| Packaged Price| Word Processing (WP)| $125| $18| | WP & SS| $220| Spreadsheet (SS)| $150| $20| | WP & AS| $280|
Accounting Software (AS)| $225| $25| | All three| $380| Required:
a.Using the stand-alone revenue-allocation method, allocate the $380 packaged price of "All Three" to the three software products
1.with selling prices as the weights.
2.with individual product costs as the weights.
3.based on physical units.

b.Allocate the $380 packaged price of "All Three" to the three software products using the incremental revenue-allocation method. Assume Word Processing is the primary product, followed by Spreadsheet, and then Accounting Software. Answer:

a1.WP $125 + SS $150 + AS $225 = $500

WP $125 / $500 × $380= $ 95
SS $150 / $500 × $380= $114
AS $225 / $500 × $380= $171
Total$380

a2.WP $18 + SS $20 + AS $25 = $63

WP $18 / $63 × $380= $108.57
SS $20 / $63 × $380= $120.64
AS $25 / $63 × $380= $150.79
Total$380.00

a3.1 / (1+ 1 + 1) × $380 = $126.67 per software package

b.
Product| Revenue Allocated| Revenue Remaining To Be Allocated| WP| $125| $380 -125 = $255|
SS| $95($220-$125)| $380 - $125 - $95 = $160|
AS| $160| none|
Total revenue allocated| $380| |
Answer the following questions using the information below:

The Appliance Store sells a refrigerator and a freezer as a single package for $1,000. Other data are in the chart below.

| Refrigerator| Full-size Freezer| Packaged Price|
Selling price| $825| $375| $1,000|
Manufacturing cost per unit| $620| $180| |
Stand-alone product revenues| $1,225,000| $775,000| |

3) Using the stand-alone method with selling price as the...
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