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Exam 24: Performance Measurement and Responsibility Accounting

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Question 61

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The first three steps in preparing a departmental income statement are: (1)accumulate __________________ of the department, (2)allocate __________________ to the department,and (3)allocate _____________________ to the operating departments. answers must appear in this order

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direct expenses ;ind...

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Question 62

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The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:

A) Floor space of each department.
B) Relative number of items each department had on sale.
C) Number of customers to enter each department.
D) An equal amount of cost for each department.
E) Proportion of sales of each department.

F) D) and E)
G) A) and B)

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Question 63

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A lumber mill bought a shipment of logs for $40,000.When cut,the logs produced a million board feet of lumber in the following grades.Compute the cost to be allocated to Type 1 and Type 2 lumber,respectively,if the value basis is used. Type 1-400,000 bd.ft.priced to sell at $0.12 per bd.ft. Type 2- 400,000 bd.ft.priced to sell at $0.06 per bd.ft. Type 3- 200,000 bd.ft.priced to sell at $0.04 per bd.ft.

CakeCo,Inc.has three operating departments.Information about these departments is listed below.Maintenance is service department at CakeCo that incurred $12,000 of costs during the period.If allocated maintenance cost is based on floor space occupied by each of the operating departments,compute the amount of maintenance cost allocated to the Baking Department.

Indirect expenses are allocated to departments based upon the benefits received by each department.

Karl and Grady are managers of two product lines for Brewster Company.One of them is a candidate for promotion based on performance.Using the data below,determine who had the better performance using performance measures such as net income,profit margin,and return on investment.Show your calculations and support your answer.

The salaries of employees who spend all their time working in one department are:

A report that accumulates the actual expenses that a manager is responsible for and their budgeted amounts is a:

The following data is available for the Janitorial Services Department of Glitterol Co. Required: Calculate departmental contribution to overhead for the Janitorial Services Department,including the department's contribution as a percentage of revenues.

A selling department is usually evaluated as a profit center.

Pleasant Hills Properties is developing a golf course subdivision that includes 250 home lots;100 lots are golf course lots and will sell for $95,000 each;150 are street frontage lots and will sell for $65,000.The developer acquired the land for $1,800,000 and spent another $1,400,000 on street and utilities improvement.Compute the amount of joint cost to be allocated to the street frontage lots using value basis.

Division P of Launch Corporation has the capacity for making 75,000 wheel sets per year and regularly sells 60,000 each year on the outside market.The regular sales price is $100 per wheel set,and the variable production cost per unit is $65.Division Q of Launch Corporation currently buys 30,000 wheel sets (of the kind made by Division P) yearly from an outside supplier at a price of $90 per wheel set.If Division Q were to buy the 30,000 wheel sets it needs annually from Division P at $87 per wheel set,the change in annual net operating income for the company as a whole,compared to what it is currently,would be:

In the two-stage cost allocation,___________________ costs are allocated to operating departments,and the operating department costs are allocated to ________________.

A cost center does not directly generate revenues.

Cycle time is calculated by process time plus inspection time plus move time plus _____________.

Two investment centers at Marshman Corporation have the following current-year income and asset data:

Plans that identify costs and expenses under each manager's control prior to the reporting period,typically based on the flexible budget approach,are called:

Brownley Company has two service departments and two operating (production) departments.The Payroll Department services all three of the other departments in proportion to the number of employees in each.The Maintenance Department costs are allocated to the two operating departments in proportion to the floor space used by each.Listed below are the operating data for the current period: The total cost of operating the Maintenance Department for the current period is:

Super Grocery store allocates its service department expenses to its various operating (sales) departments.The following data is available for its service departments: The following information is available for its three operating (sales) departments: What is the total administrative expense allocated to the Meats department?

A cost center is a unit of a business that incurs costs without directly generating revenues.All of the following are considered cost centers except: