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Exam 25: Departmentalized Profit and Cost Centers

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Question 21

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The price at which goods are moved from one segment of a company to another is the ____________________ price.

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Question 22

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The telephone expense is allocated on the basis of floor space. Department A occupies 1,875 square feet and Department B occupies 625 square feet. If the telephone expense is $600, the amount allocated to Department A is

A) $150.
B) $300.
C) $450.
D) $288.

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

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Question 23

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One department in a company had a contribution margin of $15,000 and a net loss from operations of $2,000. The indirect expenses allocated to this department would have been incurred whether or not the department existed. If this department had been eliminated, the company's reported net income would have been

City Shoe's office expenses for the year totaled $63,000 and are to be allocated on the basis of the total sales of each department. Using the financial data given below compute the amount allocated to each department. Total sales: (1) Women's Shoes, $322,500 (2) Men's Shoes, $270,000 (3) Children's Shoes, $157,500

If a segment of business is considered a profit center

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

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 contribution margin is

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.

-Using the information provided, determine and present in good form, the Operating Expenses section of the Income Statement for Cody's Conundrums. Note: The last line item will be Total Indirect Expense.

Department XYZ had sales of $90,000, direct expenses of $60,000 and indirect expenses of $50,000. The indirect expenses allocated to this department would have been incurred whether or not the department existed. If this department had been eliminated, the company's reported net income would have been

Allocated expenses can be rounded to the nearest whole dollar on departmental income statements.

Contribution margin is another name for gross profit.

Management decisions involving the elimination of a department should be based on the contribution margin of the department.

-Using the information provided, determine and present in good form, the Gross Profit section of the Income Statement for Cody's Conundrums.

A company may have several cost centers, but it can have only one profit center.

Which of the following is NOT a cost center?

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

Barista Coffee Shoppe and Store has two departments. The Store sells ground coffees, coffee beans, grinders, coffee makes, cappuccino machines, mugs, aprons, flavored additives, and flavored creamers. The Shoppe sells brewed coffees. Prepare the gross profit section of the Income Statement for Barista Coffee Shoppe and Store as of its yearend on June 30, 2013 using the information given. Include the proper heading.

When a business is organized into separate departments, it is necessary to provide accounting information about each department.

-Using the information provided, determine and present in good form, the Cost of Goods Sold section of the Income Statement for Cody's Conundrums.