Exam 11: Reporting for Control

The Post Division of the M.T. Woodhead Company produces basic posts that can be sold to outside customers or sold to the Lamp Division of the M.T. Woodhead Company. Last year, the Lamp Division bought all of its 25,000 posts from the Post Division at $1.50 each. The following data are available for last year's activities of the Post Division: The total fixed costs would be the same for all the alternatives considered below. -Suppose the transfer of posts to the Lamp Division will cut into sales to outside customers by 15,000 units.What is the lowest transfer price that would not reduce the operating income of the Post Division?

Divisions A and B of Denner Company reported the following results for October: Sales Variable Expenses as a Percentage of Sales Segment Margin Division A Division B \ 90,000 \ 150,000 70\% 60\% \ 2,000 \ 23,000 If common fixed expenses were $31,000,what were the total fixed expenses?

More Company has two divisions: L and M.During July,the contribution margin in Division L was $60,000.The contribution margin ratio in Division M was 40%,and its sales were $250,000.Division M's segment margin was $60,000.The common fixed expenses were $50,000,and the company operating income was $20,000.What was the segment margin for Division L?

Faast Company's quality cost report is to be based on the following data: -What will be the total internal failure cost appearing on the quality cost report?

Residual income is the operating income that an investment centre earns above the minimum required return on the investment in operating assets.

Throughput time consists of which of the following?

Galati Company's quality cost report is to be based on the following data: Lost sales due to poor quality \ 22,000 Test and inspection of incoming materials \ 91,000 Rewvork labour and overhead \ 55,000 Test and inspection of in-process goods \ 29,000 Product recalls \ 46,000 Quality data gathering, analysis, and reporting \ 10,000 Disposal of defective products \ 83,000 Maintenance of test equipment \ 57.000 Quality engineering \ 97.000 Required: Prepare a quality cost report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

Which of the following would be classified as an appraisal cost on a quality cost report?

Appraisal costs are incurred to identify defective products before they are shipped to customers.

The use of return on investment as a performance measure may lead managers to make decisions that are NOT in the best interests of the company as a whole.

Eagan Company's quality cost report is to be based on the following data: -What will be the total external failure cost appearing on the quality cost report?

Godunov Company's quality cost report is to be based on the following data: Downtime caused by quality problems \ 12,000 Rework labour and overhead \ 42,000 Quality circles \ 34,000 Returns arising from quality problems \ 97,000 Supervision of testing and inspection activities \ 20,000 Test and inspection of in-process goods \ 98,000 Systems development \ 38,000 Amortization of test equipment \ 24,000 Warranty repairs and replacements \ 60,000 Required: Prepare a quality cost report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

The following selected data pertain to the belt division of Allen Corp. for last year: -What was the residual income?

Larinore Corporation has a Castings Division that does casting work of various types.The company's Machine Products Division has asked the Castings Division to provide it with 20,000 special castings each year on a continuing basis.The special castings would require $10 per unit in variable production costs.The Machine Products Division has a bid from an outside supplier of $29 per unit for the castings. In order to have time and space to produce the new castings,the Castings Division would have to cut back production of another casting: the RB4,which it presently is producing.The RB4 sells for $30 per unit,and requires $12 per unit in variable production costs.Boxing and shipping costs of the RB4 are $4 per unit.Boxing and shipping costs for the new special casting would be only $1 per unit.The company is now producing and selling 100,000 units of the RB4 each year.Production and sales of this casting would drop by 20% if the new casting is produced. Required: a)What is the range of transfer prices within which both the divisions' profits would increase as a result of agreeing to the transfer of 20,000 castings per year from the Castings Division to the Machine Products Division? b)Is it in the best interests of Larinore Corporation for this transfer to take place? Explain.

Canon Company has two sales areas: North and South. During last year, the contribution margin in the North was $50,000, or 20% of sales. The segment margin in the South was $15,000, or 8% of sales. Traceable fixed costs were $15,000 in the North and $10,000 in the South. During last year, the company reported total operating income of $26,000. -What were the total fixed costs (traceable and common)for Canon Company for the year?

An increase in appraisal costs will usually result in an increase in which of the following?

(Appendix 11B)Which one of the following is NOT an example of an order-filling marketing activity?

Eagan Company's quality cost report is to be based on the following data: -What will be the total appraisal cost appearing on the quality cost report?

All other things being equal,which of the following is a consequence of an increase in a division's traceable fixed expenses?

Reed Company reported total sales of $150,000 last year and a return on investment (ROI)of 12%.If the company's turnover was 3,what was the company's operating income for the year?