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Exam 25: Departmentalized Profit and Cost Centers

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Question 51

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Semidirect and indirect expenses are treated the same for accounting purposes.At the end of the accounting period they are

A) recorded by the department they relate to.
B) allocated.
C) charged to headquarters (corporate) general expenses.
D) treated as direct expenses.

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

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Question 52

Multiple Choice

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Departmental income statements provide management with information necessary for decision-making.Which of the following is NOT a decision made possible by these statements?

A) where improvements in the profitable departments are needed
B) which departments to expand
C) whether or not to eliminate a department
D) what base to use to allocate costs

E) A) and B)
F) All of the above

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Question 53

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Income from operations provides a better measure for determining whether a segment or department should be discontinued over contribution margin of the segment or department.

In a store with several sales departments,departmentalized accounts would be used for

The purchasing,information systems,and maintenance departments are examples of profit centers of a company.

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

For accounting purposes,both revenue and cost data are accumulated for a profit center.

Eldercare One,Two and Three are managed as a profit centers by the parent company.Revenues were $1,200,000,$500,000 and $300,000 respectively and patients numbered 270,80 and 50 respectively.Insurance costs of $400,000 are allocated to each center based on number of patients.Eldercare Two would be allocated cost of:

Department B had net sales of $70,000,gross profit on sales of $35,000,total direct expenses of $9,000,and total indirect expenses of $6,000.Department B's net income is

Costs that cannot be directly assigned to a department,but are closely related to departmental activities are categorized as

Miscellaneous Income must be traced to a specific department or segment.

Examine the following Income Statement for Gemology Products and determine whether or not to close the Jewelry Department.If the Jewelry Department is closed,the Insurance Expense will be reduced by $500 and one office employee part time position will be eliminated.That position pays $6,500 a year.The other expenses will remain.

Moriah's Creations has two departments,Clothing and Fashion Accessories.The following charge sales were made during the month of September.The Sales tax is 7%.Complete the Sales Journal.Give a brief description of Lily Pad's purchase.

Departments that provide services to other departments of the firm are often organized as ____________________ centers.

XYZ Company has four sales territories and is considering eliminating the Great Lakes Region which had sales of $100,000,direct expenses of $70,000 and indirect expenses of $50,000.If the Great Lakes Region is eliminated,80% of the indirect expenses would still remain.If this region were to be eliminated,the company's overall net income would be:

In departmental accounting,expenses that can be closely identified with an individual department are referred to as ____________________ expenses.

The Whippleton Department had gross profit on sales of $120,000,contribution margin of $102,000,total direct expenses of $18,000,and total indirect expenses of $52,000.The Whippleton Department has

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?

Eliminating a department should eliminate all ____________________ expenses of the department.

Operating expenses that cannot be easily assigned to particular departments at the time transactions occur and are recorded are called ____________________ expenses.