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Exam 25: Departmentalized Profit and Cost Centers

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Question 51

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If an attempt is made to identify and accumulate both revenue and cost data for a specific segment of a company, that segment is called a(n) ____________________ center.

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Question 52

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How much of the computer system's cost will be allocated to the Business Consulting Division?

A) $96,000.
B) $60,000.
C) $84,000.
D) $80,000.

E) A) and C)
F) None of the above

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Question 53

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Joe's Haberdashery has two departments, Clothing and Accessories. The Sales Journal for Joe's is shown below. Fill in the missing numbers. What is the Sales Tax percent charged?

Office salaries expense should be allocated on the basis of total sales in each department.

A department that has a positive contribution margin is contributing something toward the net income of the business.

Nonoperating income, such as interest income, should be allocated on the basis of total sales in each department.

The area of accounting that provides financial information about individual segments, activities, or products of a business is called ____________________ accounting.

Prestige Corporation has Sales of $98,500, Indirect Expenses of $26,000, Direct Expenses of $62,400, and Cost of Goods Sold of $49,600. What is Prestige Corporation's Contribution Margin?

Which of the following enables management to evaluate the performance of each business segment?

Bamboozle Solutions has two departments, A and B. The total indirect expenses by category are given as are the Value of the Assets, Square Feet, and Sales for each department. $\begin{array}{|l|r|r|}\hline \text { Indirect Expense } & & {\text { Total }} \\\hline \text { Insurance Expense } & & \$ 32,000 \\\hline \text { Rent Expense } & & 36,000 \\\hline \text { Utilities Expense } & & 15,000 \\\hline \text { Office Salaries Expense } && 78,000 \\\hline \text { Other Office Expense } && 4,000 \\\hline \text { Uncollectible Accounts Expense } && 21,000 \\\hline\end{array}$ $\begin{array} { | l | r | r | } \hline & \text { Department A } & \text { Department B } \\\hline \text { Asset Item } & & \\\hline \text { Equipment } & 50,000 & 65,000 \\\hline \text { Inventory } & 170,000 & 215,000 \\\hline \text { Square Feet } & 14,000 & 18,000 \\\hline \text { Sales } & 420,000 & 500,000 \\\hline\end{array}$ -Based on the information given, calculate the allocations for each of the indirect expenses given based on their logical basis. (Keep two decimals in every percent calculation (i. e., 25.65% or .2565 not 26%). Round final allocation amount to the nearest dollar.)