# 4210 Practice Exam 1 Solution Essay

Words: 1441
Pages: 6

Accounting 4210, Practice Exam 1 Solution Name______________ Section___

Instructions:
You have 75 minutes to complete 11 questions on this exam.
The 10 multiple choice questions are worth 4 points each.
a. Credit will only be given for clearly circling one of the four options.
The workout questions are worth a total of 60 points.
a. Credit will only be given if you clearly show your work, and clearly indicate the final answer.
Good luck!

1. SuperFine Restaurant Supply Company reported the following information for the year just ended. Estimated Actual
Units sold 1,000 1,100
Direct labor hours 2,000 2,050

Sales Revenue \$140,000 \$145,000
Direct materials cost 30,000 31,000
Direct labor cost 20,000 22,000
What is the amount of maintenance that would be allocated to the machining department, assuming Hampton uses the step-down method (starting with Supervision, then Maintenance) to allocate the costs of service departments?

A) \$252,000
B) \$378,000
C) \$226,800
D) \$240,000

The amount of Supervision’s costs allocated to Maintenance = \$120,000 * 15% = \$18,000. Maintenance department’s costs to be allocated now equal \$378,000 (\$360,000 + \$18,000).

The amount of Maintenance’s costs allocated to machinery = \$378,000 * (.6 / .9) = \$252,000.

9. What is the amount of supervision that would be allocated to the machining department, assuming Hampton uses the direct-method to allocate the costs of service departments (round to the nearest dollar)?
A) 72,000
B) 80,000
C) 90,000
D) 84,705

\$120,000 * (.6 / .85) = \$84,705.88

10. Using the reciprocal method, how much of the Supervision Department’s costs would be allocated to the Assembly Department?
A) 39,594
B) 285,686
C) 51,000
D) 38,653