Question 1

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

Accepted Answer

A) Cost 
B) Profit 
A) Cost 
B) Profit

Question 2

The amount of floor space occupied by each department is a common basis for allocating rent expense or utilities expense.

Accepted Answer

A) True 
 B)False

Question 3

One department in a company had a contribution margin of $18,000 and a net loss from operations of $3,000. 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) $18,000 lower. 
B) $3,000 higher. 
C) $15,000 lower. 
D) the same with or without the department. 
A) $18,000 lower. 
B) $3,000 higher. 
C) $15,000 lower. 
D) the same with or without the department.

Question 4

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 25% of the capacity, the Tax Division would require 45% of the capacity, and the Business Consulting Division would require 30% of the capacity. The computer system will cost $270,000.
-
How much of the computer system's cost will be allocated to the Audit Division?

Accepted Answer

A) $90,000. 
B) $67,500. 
C) $121,500. 
D) $81,000. 
A) $90,000. 
B) $67,500. 
C) $121,500. 
D) $81,000.

Question 5

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 25% of the capacity, the Tax Division would require 45% of the capacity, and the Business Consulting Division would require 30% of the capacity. The computer system will cost $270,000.
-
How much of the computer system's cost will be allocated to the Tax Division?

Accepted Answer

A) $90,000. 
B) $67,500. 
C) $121,500. 
D) $81,000. 
A) $90,000. 
B) $67,500. 
C) $121,500. 
D) $81,000.

Question 6

The Whippleton Department had gross profit on sales of $120,000, contribution margin of $102,000, total direct expenses of $18,000, and total indirect expenses of $52,000. The Whippleton Department has:

Accepted Answer

A) a net income from operations of $42,000. 
B) a net income from operations of $8,000. 
C) a net income from operations of $50,000. 
D) a net loss from operations $10,000. 
A) a net income from operations of $42,000. 
B) a net income from operations of $8,000. 
C) a net income from operations of $50,000. 
D) a net loss from operations $10,000.

Question 7

Annie Tyme Clocks purchases a cuckoo clock from Switzerland, including insurance and shipping costs, for $620 per unit. The markup on the clock is 40% for a sales price of $868. Other traceable direct costs amount to $14 per unit. The indirect costs associated with this product amount to
$47,960. How many cuckoo clocks must Annie sell in order to break even?

Accepted Answer

A) $193 
B) $205 
C) $56 
D) $78 
A) $193 
B) $205 
C) $56 
D) $78

Question 8

Data related to the income and expenses of Moffet Company for the year ended December 31, 2019, are shown below. Use this information to prepare a departmental income statement showing contribution margin and net income of each department.

Accepted Answer

MOFFET COMPANY
Incom

Question 9

The departments of Cacophony Music Company are listed below. For each, determine whether it is a cost center or a profit center.
------1. Instrument Rental Department
------2. Instrument Repair Department
------3. Accounting Department
------4. Recording Studio
------5. Maintenance Department
------6. Sheet Music Department
------7. Storeroom
------8. Customer Service
------9. CDs and Tapes Department
------10. Purchasing & Receiving

Accepted Answer

(1) Profit, (2) Profit, (3) Co

Question 10

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

Accepted Answer

A) Cost 
B) Profit 
A) Cost 
B) Profit

Question 11

In departmental accounting, expenses that can be closely identified to an individual department are--------expenses.

Accepted Answer

The answer of In departmental accounting, expenses that can be...

Question 12

City Shoe's office expenses for the year totaled $76,000 and are to be allocated on the basis of the total sales of each department. Using the financial data given below compute the amount allocated to each department.
Total sales:
(1.)Women's Shoes, $322,500 
(2.)Men's Shoes, $270,000
(3.)Children's Shoes, $157,500

Accepted Answer

1. $32,680

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Income from operations provides a better measure for determining whether a segment or department should be discontinued over contribution margin of the segment or department.

Accepted Answer

A) True 
 B)False

Question 15

Max and Morris operate a restaurant and bakery. They share some basic accounting, information systems and office space. Max runs the restaurant with sales of $63,000 and direct expenses of 60% of his sales while Morris runs the bakery with sales of $127,000 and direct expenses of 55% of his sales. With fixed costs of $25,000 allocated evenly between the two, what is the net income earned by Max and Morris for the prior year.

Accepted Answer

Max, $12,7

Question 16

Traditional financial statements may not contain adequate information for managing a business.

Accepted Answer

A) True 
 B)False

Question 17

City Shoe's insurance expense for the year totaled $8,600 and is to be allocated on the basis of the book value of inventory and equipment in each department. Using the financial data given below; compute the amount allocated to each department.
Book value of inventory and equipment: 
(1.)Women's Shoes, $79,800
(2.)Men's Shoes, $69,300
(3.)Children's Shoes, $60,900

Accepted Answer

1. $3,268;

Question 18

Match between columns
                        Premises:   Operating expenses that cannot be readily identified and are not closely related to activi within a department
  The branch of accounting that provides financial information about business segments, activities, or products
  Operating expenses that are identified directly with a department and are recorded by department
  A business segment that produces revenue
  Income statement that shows each department's contribution margin and net income fro operations after all expenses are allocated
  The process that allows management to evaluate the performance of each segment of th business and assign responsibility for its financial results
  A business segment that incurs costs but does not produce revenue
  The price at which one segment's goods are transferred to another segment of the company
  Gross profit on sales minus direct expenses
  Operating expenses that cannot be directly assigned to a department but are closely related to departmental activities

Accepted Answer

The Answer of Contribution margin and Cost center and Departmental is...

Question 19

Some indirect costs may be allocated to departments based on departmental sales in proportion to total sales.

Accepted Answer

A) True 
 B)False

Question 20

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.

Accepted Answer

A) True 
 B)False

Exam 25: Departmentalized Profit and Cost Centers

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

The amount of floor space occupied by each department is a common basis for allocating rent expense or utilities expense.

The Whippleton Department had gross profit on sales of $120,000, contribution margin of $102,000, total direct expenses of $18,000, and total indirect expenses of $52,000. The Whippleton Department has:

Data related to the income and expenses of Moffet Company for the year ended December 31, 2019, are shown below. Use this information to prepare a departmental income statement showing contribution margin and net income of each department.

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

In departmental accounting, expenses that can be closely identified to an individual department are--------expenses.

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

Income from operations provides a better measure for determining whether a segment or department should be discontinued over contribution margin of the segment or department.

Traditional financial statements may not contain adequate information for managing a business.

Some indirect costs may be allocated to departments based on departmental sales in proportion to total sales.

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.

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 Teh 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 Analysis

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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