Question 1

The bond department shows gross sales of $179,000 and cost of goods sold of $46,000. What is the gross profit of the bond department?

Accepted Answer

A)  $154,000 
B)  $133,000 
C)  67.2% 
D)  32.8% 
A)  $154,000 
B)  $133,000 
C)  67.2% 
D)  32.8%

Question 2

Indirect expenses may be allocated to the departments based on the cost of goods sold in each department.

Accepted Answer

A) True 
 B)False

Question 3

Indirect operating expenses are normally

Accepted Answer

A)  approximations. 
B)  assigned by arbitrary methods. 
C)  precise expenses determined by managers. 
D)  overlooked. 
A)  approximations. 
B)  assigned by arbitrary methods. 
C)  precise expenses determined by managers. 
D)  overlooked.

Question 4

Each department should determine its direct operating margin and then subtract indirect expenses from that total as a basis for overall performance evaluation.

Accepted Answer

A) True 
 B)False

Question 5

Match the terms with the definitions.
-Operating expenses that are incurred for the sole benefit of and are traceable to a specific department.

Accepted Answer

A) departmental direct operating margin 
B) departmental gross profit 
C) departmental operating expense summary 
D) departmental operating income 
E) direct expenses
F)indirect expenses 
A) departmental direct operating margin 
B) departmental gross profit 
C) departmental operating expense summary 
D) departmental operating income 
E) direct expenses
F)indirect expenses

Question 6

The difference between a department's gross profit and its operating expenses is known as the departmental direct operating profit.

Accepted Answer

A) True 
 B)False

Question 7

To compute departmental operating income, direct expenses are assigned to departments based on the actual expenses incurred.

Accepted Answer

A) True 
 B)False

Question 8

The sales, gross profit, and direct and indirect operating expenses of Departments A and B of Cardoba Inc. are as follows: $\begin{array}{lrrr}&\text { Dept. A }&\text { Dept. B }&\text { Total }\
\text { Sales } & \$ 420,000 & \$ 290,000 & \$ 710,000 \
\text { Gross profit } & 243,000 & 197,000 & 440,000 \
\text { Direct operating expenses } & 205,000 & 118,000 & 323,000 \
\text { Indirect operating expenses } & & & 160,000
\end{array}$ ​
Required:
Compute the departmental direct operating margin and direct operating margin percentage for each department.

Accepted Answer

The answer of The sales, gross profit, and direct and...

Question 9

Match the terms with the definitions.
-The difference between a department's gross profit and its direct operating expenses.

Accepted Answer

A) departmental direct operating margin 
B) departmental gross profit 
C) departmental operating expense summary 
D) departmental operating income 
E) direct expenses
F)indirect expenses 
A) departmental direct operating margin 
B) departmental gross profit 
C) departmental operating expense summary 
D) departmental operating income 
E) direct expenses
F)indirect expenses

Question 10

The difference between a department's net sales and cost of goods sold is known as the departmental operating income.

Accepted Answer

A) True 
 B)False

Question 11

Selena located an excellent office location and she and Ian rented the office space. Selena uses 30% of the space solely for her business; Ian uses 40% of the space solely for his business. The remainder is shared equally by both. How should the total rent and other space expenses be allocated?

Accepted Answer

A)  30% to Selena; 40% to Ian 
B)  45% to Selena; 55% to Ian 
C)  50% to Selena; 50% to Ian 
D)  30% to Selena; 40% to Ian; 30% to Building Expense 
A)  30% to Selena; 40% to Ian 
B)  45% to Selena; 55% to Ian 
C)  50% to Selena; 50% to Ian 
D)  30% to Selena; 40% to Ian; 30% to Building Expense

Question 12

Departmental reports are used for internal management only; therefore the accounting rules for external reporting do not apply.

Accepted Answer

A) True 
 B)False

Question 13

To compute departmental direct operating margin, it is necessary to determine the gross profit and the indirect operating expenses of each department.

Accepted Answer

A) True 
 B)False

Question 14

Direct operating margin may be used as a basis for eliminating a department.

Accepted Answer

A) True 
 B)False

Question 15

Justin owns an appliance store that offers free delivery. Mileage records are maintained for the three sales departments. $\begin{array}{ll}
\text { Department } 1 & 19,000 \text { miles } \
\text { Department } 2 & 32,000 \text { miles } \
\text { Department } 3 & 29,000 \text { miles }
\end{array}$ ​
The cost of using the truck for the last year including depreciation amounted to $12,000.
​
Required:
Allocate the cost of the truck among the three sales departments on the basis of miles driven.

Accepted Answer

19,000 + 3

Question 16

Departmental reports are part of the basic financial statements of the business.

Accepted Answer

A) True 
 B)False

Question 17

To compute departmental gross profit, it is necessary to determine the net sales, purchases, and inventory by departments.

Accepted Answer

A) True 
 B)False

Question 18

The parts department shows gross sales of $116,000 and cost of goods sold of $38,000. What is the gross profit percentage of the parts department?

Accepted Answer

A)  67.2% 
B)  32.8% 
C)  48.7% 
D)  51.3% 
A)  67.2% 
B)  32.8% 
C)  48.7% 
D)  51.3%

Question 19

Indirect expenses are subtracted from the total direct operating margin to calculate total operating income.

Accepted Answer

A) True 
 B)False

Question 20

Direct operating margin may be used as a basis for evaluating departmental performance.

Accepted Answer

A) True 
 B)False

Exam 25: Departmental Accounting

The bond department shows gross sales of $179,000 and cost of goods sold of $46,000. What is the gross profit of the bond department?

Indirect expenses may be allocated to the departments based on the cost of goods sold in each department.

Indirect operating expenses are normally

Each department should determine its direct operating margin and then subtract indirect expenses from that total as a basis for overall performance evaluation.

Match the terms with the definitions. -Operating expenses that are incurred for the sole benefit of and are traceable to a specific department.

The difference between a department's gross profit and its operating expenses is known as the departmental direct operating profit.

To compute departmental operating income, direct expenses are assigned to departments based on the actual expenses incurred.

Match the terms with the definitions. -The difference between a department's gross profit and its direct operating expenses.

The difference between a department's net sales and cost of goods sold is known as the departmental operating income.

Selena located an excellent office location and she and Ian rented the office space. Selena uses 30% of the space solely for her business; Ian uses 40% of the space solely for his business. The remainder is shared equally by both. How should the total rent and other space expenses be allocated?

Departmental reports are used for internal management only; therefore the accounting rules for external reporting do not apply.

To compute departmental direct operating margin, it is necessary to determine the gross profit and the indirect operating expenses of each department.

Direct operating margin may be used as a basis for eliminating a department.

Departmental reports are part of the basic financial statements of the business.

To compute departmental gross profit, it is necessary to determine the net sales, purchases, and inventory by departments.

The parts department shows gross sales of $116,000 and cost of goods sold of $38,000. What is the gross profit percentage of the parts department?

Indirect expenses are subtracted from the total direct operating margin to calculate total operating income.

Direct operating margin may be used as a basis for evaluating departmental performance.

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Notes and Interest

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Corporations: Bonds

Statement of Cash Flows

Analysis of Financial Statements

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

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