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Exam 24: Departmental Accounting

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Question 31

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Below is a list of expenses (direct and indirect).You are to determine the total direct cost for departments A and B. Direct cost for department A $ ________ B $ ________

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Direct cost for department A $...

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Question 32

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To calculate gross profit,subtract cost of goods sold from net sales.

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Question 33

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Departmental income statements are prepared to indicate how well each department is performing.

Gross profit by department appears on the:

Insurance paid on employees working in high risk areas of a machine shop.________

Direct expenses are assigned to departments based on the actual expenses incurred.

To calculate departmental gross profit,separate accounts should be set up for Sales,Purchases,etc. ,for each department.

The catering department of a construction firm is a(n) :

An example of a cost center is:

If the music department in a department store is 8,000 square feet and the total square feet is 40,000,how much of the total building cost of $50,000 will be allocated to music?

Given the following,calculate contribution margin and net income: $\begin{array} { l r r r } & & & \text { Indirect } \\& \text { DVD } & \mathrm { CD } & \text { Expense } \\\text { Net Sales } & \$ 10,000 & \$ 5,000 & \\\text { Cost of Goods Sold } & 5,500 & 2,300 & \\ \\ \text { Operating Expenses (Indirect) }& & & \$ 3,000\end{array}$

Below is a list of departments; you are to identify each as either [1] a profit center or [2] a cost center. -The human resource office for a department store.________

Eliminating one department may increase the sales of another department.

The photography department in a department store experienced the following revenue and expenses during October: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 23,500 \\\hline \text { Cost of Goods Sold } & 8,200 \\\hline \text { Direct Operating Expenses } & 2,300 \\\hline \text { Indirect Operating Expenses } & 1,000 \\\hline\end{array}$ The photography department's contribution margin is:

Hawkeye Golf is considering dropping the clothing department because it is not generating a profit as disclosed by the following data: $\begin{array} { l r } \text { Sales } & \$ 1,800 \\\text { Cost of Goods Sold } & \$ \underline { 800 } \\\text { Gross Profit } & \$ 1,000 \\\text { Direct Expenses } & 700 \\\text { Contribution Margin } & 300 \\\text { Indirect Expenses } & ( \underline { 500 } ) \\\text { Net Loss } & \$ ( 200 )\end{array}$ Note: None of the indirect expenses can be avoided by dropping the department. Should Hawkeye drop the department? Show your computations.

Advertising totaled $10,000;$3,000 was indirect.What would be the best choice to use to allocate the indirect cost?

Prepare an income statement showing departmental contribution margin based on the following: $\begin{array} { l r r r } & \text { Dept. X } & \text { Dept. Y } & \text { Rent Expense } \\\text { Space (square feet) } & 17,500 & 35,000 & \\\text { Net Sales } & \$ 60,000 & \$ 40,000 & \\\text { Cost of Goods Sold } & 18,000 & 16,000 & \\\text { Rent Expense (allocated based on square feet) } & & & \$ 2,700\end{array}$

A company has three departments (A,B,and C) and the net sales are $350,000;$410,000;and $285,000 respectively.The cost of goods sold per department is $295,000;$360,000;and $245,000 respectively.What department has the highest gross profit?

Which of the following statements is false as it relates to direct and indirect expenses?

Department contribution margin equals gross profit on sales minus direct departmental expenses.