Question 1

The transfer price is:

Accepted Answer

A) the price for which a company sells its products to customers. 
B) the price at which a company purchases its products from a supplier. 
C) the basis on which indirect expenses are allocated. 
D) the price at which goods are moved from one department of a company to another department of the company. 
A) the price for which a company sells its products to customers. 
B) the price at which a company purchases its products from a supplier. 
C) the basis on which indirect expenses are allocated. 
D) the price at which goods are moved from one department of a company to another department of the company.

Question 2

The telephone expense is allocated to the departments based on floor space occupied. Department A occupies 1,875 square feet and Department B occupies 625 square feet. If the telephone expense is $880, the amount allocated to Department A is:

Accepted Answer

A) $660. 
B) $880. 
C) $440. 
D) $220. 
A) $660. 
B) $880. 
C) $440. 
D) $220.

Question 3

Departmental Unit A had collected $250,000 of rent in the third quarter whereas Departmental Unit B had collected $750,000 in the same period. The accounting office supports both offices but spent more time collecting receivables for Unit B. The company chose to use rent collections as its basis for allocating the $152,000 in salary and benefits of the accounting department to each Unit. Departmental Unit B will have to----------- absorb of cost related to accounting services for the third quarter.

Accepted Answer

The answer of Departmental Unit A had collected $250,000 of...

Question 4

When a company has departmentalized profit and cost centers, which of the following would not be reported separately?

Accepted Answer

A) General Office Expense. 
B) Sales. 
C) Purchases. 
D) Merchandise inventories. 
A) General Office Expense. 
B) Sales. 
C) Purchases. 
D) Merchandise inventories.

Question 5

For accounting purposes, both revenue and cost data are accumulated for a profit center.

Accepted Answer

A) True 
 B)False

Question 6

If an attempt is made to identify and accumulate the revenue and cost data for a specific segment of a company, that segment is called a(n)-------------center.

Accepted Answer

The answer of If an attempt is made to identify...

Question 7

City Shoe's loss from uncollectible accounts is estimated to be one-half of 1 percent of net credit sales. Using the financial data given below, compute the amount allocated to each department. Credit sales:
(1.)Women's Shoes, $278,200 
(2.)Men's Shoes, $185,800
(3.)Children's Shoes, $116,000
Sales returns and allowances (credit sales):
 (1.)Women's Shoes, $2,200
(2.)Men's Shoes, $1,800
(3.)Children's Shoes, $1,000

Accepted Answer

1. $1,380;

Question 8

Indirect expenses of the human resource of a company might include:

Accepted Answer

A) wages of the human resource manager. 
B) benefits of the department secretary. 
C) supplies ordered and used by the department. 
D) rent expense. 
A) wages of the human resource manager. 
B) benefits of the department secretary. 
C) supplies ordered and used by the department. 
D) rent expense.

Question 9

McKay Corporation has Sales of $174,500, Cost of Goods Sold of $72,000, Direct Expenses of $39,300, and Indirect Expenses of $29,000. What is McKay Corporation's Net Income from Operations?

Accepted Answer

A) $102,500 
B) $63,200 
C) $34,200 
D) $72,000 
A) $102,500 
B) $63,200 
C) $34,200 
D) $72,000

Question 10

XYZ Company has four sales territories and is considering eliminating the Great Lakes Region which had sales of $110,000, direct expenses of $70,000 and indirect expenses of $60,000. If the Great Lakes Region is eliminated, 80% of the indirect expenses would still remain. If this region were to be eliminated, the company's overall net income would be:

Accepted Answer

A) $12,000 higher. 
B) $10,000 higher. 
C) $40,000 lower. 
D) $28,000 lower. 
A) $12,000 higher. 
B) $10,000 higher. 
C) $40,000 lower. 
D) $28,000 lower.

Question 11

Match between columns
                        Premises:  Instrument Rental Department
 Instrument Repair Department
 Accounting Department
 Recording Studio
 Maintenance Department
 Sheet Music Department
 Storeroom
 Customer Service
 CDs and Tapes Department
 Purchasing & Receiving

Accepted Answer

The Answer of cost center and profit center is...

Question 12

Department B had net sales of $82,000, gross profit on sales of $41,600, total direct expenses of $12,500, and total indirect expenses of $7,300. Department B's net income is:

Accepted Answer

A) $29,100. 
B) $20,600. 
C) $34,300. 
D) $21,800. 
A) $29,100. 
B) $20,600. 
C) $34,300. 
D) $21,800.

Question 13

Which of the following is usually not departmentalized?

Accepted Answer

A) Interest expense. 
B) Payroll taxes expense. 
C) Depreciation expense. 
D) Rent expense. 
A) Interest expense. 
B) Payroll taxes expense. 
C) Depreciation expense. 
D) Rent expense.

Question 14

City Shoe's custodial expense for the year totaled $14,600 and is to be allocated on the basis of the floor space occupied by each department. Using the financial data given below; compute the amount allocated to each department.
Floor space occupied:
(1.)Women's Shoes, ,13,455 sq. ft.
(2.)Men's Shoes, 4,140 sq. ft.
(3.)Children's Shoes, 3,105 sq. ft.

Accepted Answer

1. $9,490;

Question 15

Eldercare One, Two and Three are managed as a profit centers by the parent company. Revenues were $1,200,000, $500,000 and $300,000, respectively, and patients numbered 270, 80 and 50, respectively. Insurance costs of $625,000 are allocated to each center based on number of patients. Eldercare One would be allocated insurance cost of:

Accepted Answer

A) $421,875 
B) $208,333 
C) $125,000 
D) $168,750 
A) $421,875 
B) $208,333 
C) $125,000 
D) $168,750

Question 16

When total revenues equal total expenses, a business is said to----------- .

Accepted Answer

The answer of When total revenues equal total expenses, a...

Question 17

When a business is organized into separate departments, it is necessary to provide accounting information about each of the separate departments.

Accepted Answer

A) True 
 B)False

Question 18

Cody Reese, manager of Cobra Sports, Inc., decided to eliminate its Division A. Division A had a contribution margin of $14,000 and a loss from operations of $2,500. What other information does Cody need to make the correct decision?

Accepted Answer

A) which direct expenses will still be incurred. 
B) the amount of Cost of Goods Sold. 
C) the Gross Profit on Sales. 
D) which of the indirect expenses will still be incurred. 
A) which direct expenses will still be incurred. 
B) the amount of Cost of Goods Sold. 
C) the Gross Profit on Sales. 
D) which of the indirect expenses will still be incurred.

Question 19

Floor space would be a reasonable basis for the allocation of:

Accepted Answer

A) rent expense for a building. 
B) sales revenue. 
C) payroll taxes expense. 
D) advertising expense. 
A) rent expense for a building. 
B) sales revenue. 
C) payroll taxes expense. 
D) advertising expense.

Question 20

Departments that provide services to other departments of the firm are often organized as------------centers.

Accepted Answer

The answer of Departments that provide services to other departments...

Exam 25: Departmentalized Profit and Cost Centers

The transfer price is:

The telephone expense is allocated to the departments based on floor space occupied. Department A occupies 1,875 square feet and Department B occupies 625 square feet. If the telephone expense is $880, the amount allocated to Department A is:

When a company has departmentalized profit and cost centers, which of the following would not be reported separately?

For accounting purposes, both revenue and cost data are accumulated for a profit center.

If an attempt is made to identify and accumulate the revenue and cost data for a specific segment of a company, that segment is called a(n)-------------center.

Indirect expenses of the human resource of a company might include:

McKay Corporation has Sales of $174,500, Cost of Goods Sold of $72,000, Direct Expenses of $39,300, and Indirect Expenses of $29,000. What is McKay Corporation's Net Income from Operations?

Department B had net sales of $82,000, gross profit on sales of $41,600, total direct expenses of $12,500, and total indirect expenses of $7,300. Department B's net income is:

Which of the following is usually not departmentalized?

When total revenues equal total expenses, a business is said to----------- .

When a business is organized into separate departments, it is necessary to provide accounting information about each of the separate departments.

Cody Reese, manager of Cobra Sports, Inc., decided to eliminate its Division A. Division A had a contribution margin of $14,000 and a loss from operations of $2,500. What other information does Cody need to make the correct decision?

Floor space would be a reasonable basis for the allocation of:

Departments that provide services to other departments of the firm are often organized as------------centers.

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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