Question 1

The procedure for assigning indirect expenses to departments at the end of an accounting period is called

Accepted Answer

A)  valuation. 
B)  amortization. 
C)  allocation. 
D)  distribution. 
A)  valuation. 
B)  amortization. 
C)  allocation. 
D)  distribution. C

Question 2

Taylor and King,CPAs installed a new computer system.When the needs of the various divisions were analyzed,it was determined that the Audit Division would require 40% of the capacity,the Tax Division would require 25% of the capacity,and the Business Consulting Division would require 35% of the capacity.The computer system will cost $240,000. How much of the computer system's cost will be allocated to the Tax Division?

Accepted Answer

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

Question 3

Apartment Unit A had collected $250,000 of rent in the third quarter whereas Apartment Unit B had collected $750,000 in the same period.The accounting office supports both offices with more time spent collecting receivables for Unit B.The company chose to use rent collections as its basis for allocating $125,000 in salary and benefits of the accounting department to each Unit.Apartment Unit B will have to absorb ____________ of cost related to accounting services for the quarter just ended.

Accepted Answer

$93,750

Question 4

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

Accepted Answer

The answer of The price at which goods are moved...

Question 5

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.

Accepted Answer

The answer of If an attempt is made to identify...

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  $20,000 higher. 
B)  $30,000 higher. 
C)  $20,000 lower. 
D)  $30,000 lower. 
A)  $20,000 higher. 
B)  $30,000 higher. 
C)  $20,000 lower. 
D)  $30,000 lower.

Question 8

Cost centers do not directly earn revenue.

Accepted Answer

A) True 
 B)False

Question 9

Nondepartmentalized expenses include items often found under "Other Income and Other expense".

Accepted Answer

A) True 
 B)False

Question 10

Interest income and interest expense are treated as direct costs and are traced to departments or business segments.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following measurements provides a better basis for eliminating a department?

Accepted Answer

A)  Positive contribution margin and income from operations. 
B)  Fixed and variable expenses exceed contribution margin. 
C)  Fixed expenses exceed contribution margin. 
D)  Contribution margin equals fixed expenses. 
A)  Positive contribution margin and income from operations. 
B)  Fixed and variable expenses exceed contribution margin. 
C)  Fixed expenses exceed contribution margin. 
D)  Contribution margin equals fixed expenses.

Question 12

A business is said to ________________ when total revenues equal total expenses.

Accepted Answer

The answer of A business is said to ________________ when...

Question 13

Semidirect and indirect expenses are allocated to the sales department at the time the expenses are incurred.

Accepted Answer

A) True 
 B)False

Question 14

Office expenses such as postage and stationery should be allocated on the basis of contribution margin of each department.

Accepted Answer

A) True 
 B)False

Question 15

A department's ____________________ is usually more important than its net income or net loss when management is considering whether to close the department.

Accepted Answer

The answer of A department's ____________________ is usually more important...

Question 16

Which of the following is NOT a limitation to using departmental operating income?

Accepted Answer

A)  It is difficult to determine each department's fair share of semidirect and indirect expenses. 
B)  If one department is eliminated,many of the expenses allocated to it would continue. 
C)  Managers rely more on contribution per department than on income from operations. 
D)  It highlights the individual department's financial information. 
A)  It is difficult to determine each department's fair share of semidirect and indirect expenses. 
B)  If one department is eliminated,many of the expenses allocated to it would continue. 
C)  Managers rely more on contribution per department than on income from operations. 
D)  It highlights the individual department's financial information.

Question 17

Departmental financial statements are internal assessment tools used to assign responsibility for profits or losses.

Accepted Answer

A) True 
 B)False

Question 18

Taylor and King,CPAs installed a new computer system.When the needs of the various divisions were analyzed,it was determined that the Audit Division would require 40% of the capacity,the Tax Division would require 25% of the capacity,and the Business Consulting Division would require 35% of the capacity.The computer system will cost $240,000. How much of the computer system's cost will be allocated to the Business Consulting Division?

Accepted Answer

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

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A logical way to allocate janitorial wages to various departments would be on the basis of ___________________.

Accepted Answer

The answer of A logical way to allocate janitorial wages...

Exam 25: Departmentalized Profit and Cost Centers

The procedure for assigning indirect expenses to departments at the end of an accounting period is called

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

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.

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

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

Cost centers do not directly earn revenue.

Nondepartmentalized expenses include items often found under "Other Income and Other expense".

Interest income and interest expense are treated as direct costs and are traced to departments or business segments.

Which of the following measurements provides a better basis for eliminating a department?

A business is said to ________________ when total revenues equal total expenses.

Semidirect and indirect expenses are allocated to the sales department at the time the expenses are incurred.

Office expenses such as postage and stationery should be allocated on the basis of contribution margin of each department.

A department's ____________________ is usually more important than its net income or net loss when management is considering whether to close the department.

Which of the following is NOT a limitation to using departmental operating income?

Departmental financial statements are internal assessment tools used to assign responsibility for profits or losses.

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

A logical way to allocate janitorial wages to various departments would be on the basis of ___________________.

Accounting: the Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and the Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Accounts Receivable and Uncollectible Accounts

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analyses

The Statement of Cash Flows

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

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