Exam 24: Departmental Accounting

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

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

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?

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

Eliminating one department may increase the sales of another department.

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

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

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 $ ________

Given the following,calculate contribution margin and net income: Indirect DVD Expense Net Sales \ 10,000 \ 5,000 Cost of Goods Sold 5,500 2,300 Operating Expenses (Indirect) \ 3,000

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

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

Gross profit by department appears on the:

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.________

The photography department in a department store experienced the following revenue and expenses during October: Sales \ 23,500 Cost of Goods Sold 8,200 Direct Operating Expenses 2,300 Indirect Operating Expenses 1,000 The photography department's contribution margin is:

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

An example of a cost center is:

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

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

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?

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