Exam 25: Departmentalized Profit and Cost Centers

Barista Coffee Shoppe and Store has two departments.The Store sells ground coffees,coffee beans,grinders,coffee makers,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 30,2016 using the information given.Include the proper heading.

Decisions to retain,eliminate,expand or contract a segment of the business are based on the analysis of gross margin of the department or product.

Fill in the blanks where indicated in the partial Income Statement that follows.

Department A had gross profit on sales of $20,000,contribution margin of $12,000,total direct expenses of $8,000,and total indirect expenses of $7,000.Department A has

Contribution margin is another name for gross profit.

Bamboozle Solutions has two departments,A and B.The total indirect expenses by category are given as are the Value of the Assets,Square Feet,and Sales for each department.

Operating expenses that cannot be readily traced to and are not closely related to activity within a department are referred to as ____________________ expenses.

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

The breakeven point occurs when the ____________________ equals the fixed expenses of the business.

Responsibility accounting provides detailed data for each cost center and profit center so that management can determine how efficiently the individual segments are functioning.

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 A had total sales of $84,000 and Department B had total sales of $36,000.Other Office Expenses,totaling $2,500,are allocated on the basis of total sales.The amount allocated to Department A is

The contribution margin of a department is the difference between

Bamboozle Solutions has two departments,A and B.The total indirect expenses by category are given as are the Value of the Assets,Square Feet,and Sales for each department.

The departments of Cacophony Music Company are listed below.For each,determine whether it is a cost center or a profit center.

The fixed expense of a business totals $35,000.The company sells only one product for $45 per unit.The corresponding variable cost of the item sold is $25 per unit.To breakeven,the company must sell ___________ units.

A business segment or department that has a positive contribution margin contributes to increasing the net income of the business.

Prepare the Operating Expenses section of the Income Statement for Sanjam Company at yearend,March 31,2016.The Gross Profit for Sanjam Petit Fours is $36,500 and for Chocolates it is $102,350.(Hint: The first line of your partial Income Statement after the heading should be Operating Expenses,and the final line should be Total Indirect Expenses.Include Contribution Margin in its proper place. )

Department X began the current year with $20,000 in inventory.During the year,Department X net purchases amounted to $65,000 and its ending inventory was $12,000.Sales during the year totaled $170,000,other direct expenses were $37,000,and total indirect expenses of $25,000.Department B's contribution margin is

When a company has departmentalized profit and cost centers,each of the following is reported separately except for