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Exam 9: Performance Measurement and Responsibility Accounting

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Question 71

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The ________ is a report of the amount of sales less direct expenses for a department.

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Question 72

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Joint costs can be allocated either using a physical basis or a value basis.

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Question 73

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The cash conversion cycle is calculated by days' sales in accounts receivable plus ________ less days' payable outstanding.

Departmental income statements are prepared for operating departments (profit centers) but not service departments (cost centers).

The Mixed Nuts Division of Yummy Snacks, Inc. had the following operating results last year: Yummy expects identical operating results in the division this year. The Mixed Nuts Division has the ability to produce and sell 200,000 pounds of product annually. Assume that the Trail Mix Division of Yummy wants to purchase an additional 20,000 pounds of nuts from the Mixed Nuts Division. Mixed Nuts will be able to increase its profit by accepting any transfer price above:

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

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

Arkansas Toys, a retail store, has three sales departments supported by two service departments. Cost and operational data for each department follow: Determine the service department expenses to be allocated to Sales Department 1 for (round answers to whole dollars): Advertising ________ Purchasing ________

A retail store has three departments, A, B, and C, each of which has four full-time employees. The store does general advertising that benefits all departments. Advertising expense totaled $90,000 for the current year, and departmental sales were: Department A……………… $308,000 Department B……………… 644,000 Department C……………… 448,000 Total sales…………………. $1,400,000 Calculate the amount of advertising expense that should be allocated to each department?

In a firm that manufactures clothing, the department that is responsible for actually assembling the garments could best be described as a(n) :

Sturdivant Fasteners, Co. uses a traditional allocation of overhead based on direct labor hours. The manager has accumulated the following information on engineering changes, which are indirect cost of their products, for two of the company's major products: Compute the cost per unit using: The traditional two-stage allocation of the costs of engineering changes based on direct labor hours.

The Linens Department of the Krafton Department Store had sales of $282,000, cost of goods sold of $173,500, indirect expenses of $19,875, and direct expenses of $41,250 for the current period. What is the Linens Department's contribution to overhead as a percent of sales?

Canfield Technical School allocates administrative costs to its respective departments based on the number of students enrolled, while maintenance and utilities are allocated per square feet of the classrooms. Based on the information below, what is the total amount of administrative cost to the Accounting Department (rounded to the nearest dollar) if administrative costs for the school were $50,000, maintenance fees were $12,000, and utilities were $6,000?

Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: Division B of the same company would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $38 per unit and would substitute the part made by Division A. Division B requires 5,000 units of the part each period. Division A has ample capacity to produce the units for Division B without any increase in fixed costs and without cutting into sales to outside customers. If Division A sells to Division B rather than to outside customers, the variable cost be unit would be $1 lower. What is the lowest acceptable transfer price Division A should accept?

A company rents a building with a total of 50,000 square feet, which are evenly divided between two floors. The company allocates the rent for space on the first floor at twice the rate of space on the second floor. The total monthly rent for the building is $30,000. How much of the monthly rental expense should be allocated to a department that occupies 10,000 square feet on the second floor?

The process of preparing departmental income statements begins with allocating service department expenses.

Costs that the manager has the power to determine or significantly affect are called:

A department's direct expenses are usually considered uncontrollable costs.

A company has two departments, Y and Z that incur wage expenses. An analysis of the total wage expense of $19,000 indicates that Dept. Y had a direct wage expense of $2,000 and Dept. Z had a direct wage expense of $3,500. The remaining expenses are indirect and analysis indicates they should be allocated evenly between the two departments. Departmental wage expenses for Dept. Y and Dept. Z, respectively, are:

A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead) : Using direct labor hours as the allocation base, the setup cost portion of overhead that is allocated to each unit of product for Plus and Max, respectively is: