Exam 11: Reporting for Control

Westmore Company has two Service Departments and two Operating Departments. Budgeted costs and other data relating to these departments are presented below: Building \& Grounds Personnel Operating A Operating B Departmental costs \ 54,000 \ 200,000 \ 650,000 \ 800,000 Square Metres Occupied 1,000 3,000 12,000 15,000 Number of Employees 10 5 45 55 Direct Labour Hours 76,000 92,000 The costs of Building & Grounds are allocated first on the basis of square metres of space occupied. Personnel costs are allocated on the basis of number of employees. The departmental costs for the Operating Departments are overhead costs. Predetermined overhead rates in the Operating Departments are calculated on the basis of direct labour hours. - Assume that the company uses the step-down method of allocating Service Department costs to Operating Departments,and Building and Grounds costs are allocated first.How much Personnel Department cost would be allocated to Operating Department B?

The emphasis in the balanced scorecard is on improvement rather than meeting a preset standard.

Thais Company's quality cost report is to be based on the following data: Liability arising from defective products \ 65,000 Lost sales due to poor quality \ 61,000 Test and inspection of in-process goods \ 57,000 Quality circles \ 27,000 Net cost of spoilage \ 103,000 Debugging software errors \ 39,000 Rework labour and overhead \ 105,000 Final product testing and inspection \ 42,000 Statistical process control activities \ 71,000 - What will be the total internal failure cost appearing on the quality cost report?

The following selected data pertain to Beck Co.'s Beam Division for last year: Sales \ 400,000 Variable Expenses \ 100,000 Traceable Fixed Expenses \ 250,000 Average Operating Assets \ 200,000 Minimum Required Rate of Return 20\% -What was the residual income?

Fabri Company's quality cost report is to be based on the following data: Liability arising from defective products \ 56,000 Lost sales due to poor quality \ 51,000 Test and inspection of in-process goods \ 47,000 Quality circles \ 17,000 Net cost of spoilage \ 93,000 Debugging software errors \ 29,000 Rework labour and overhead \ 95,000 Final product testing and inspection \ 32,000 Statistical process control activities \ 61,000 - What will be the total internal failure cost appearing on the quality cost report?

The Holmes Division recorded operating data as follows for the past year: Sales \ 200,000 Operating Income \ 25,000 Average Operating Assets \ 100,000 Shareholders' Equity \ 80,000 Residual Income \ 13,000 -For the past year,what was the minimum required rate of return?

Russet Company has two Service Departments and two Producing Departments. Budgeted costs and budgeted activity in the various departments for the most recent year are presented below: Custodial Services Cafeteria Cutting Department Assembly Department Overhead Costs \ 252,000 \ 140,000 \ 600,000 \ 900,000 Square Metres of Space Occupied 1,000 2,000 8,000 10,000 Number of Employees 20 30 150 200 Machine Hour 40,000 60,000 Service Department costs are allocated to Producing Departments with the costs of Custodial Services allocated first on the basis of square metres of space occupied. The costs of the Cafeteria are allocated on the basis of number of employees. Predetermined overhead rates in the Cutting and Assembly departments are based on machine hours. Round all calculations to the nearest dollar. - Under the direct method of allocation,what would be the amount of Custodial Services cost allocated to the Cutting Department?

Central Medical Clinic has two Service Departments-Building Services and Energy-and three Operating Departments-Pediatrics,Geriatrics,and Surgery.Central allocates the cost of Building Services on the basis of square metres and Energy on the basis of patient days.Budgeted operating data for the year just completed follow: Building \& Grounds Personnel Operating A Operating B Departmental costs \ 64,000 \ 200,000 \ 650,000 \ 800,000 Square Metres Occupied 1,000 3,000 12,000 18,000 Number of Employees 10 5 45 55 Professional Hours 76,000 92,000 Required: a)Prepare a schedule to allocate Service Department costs to Operating Departments by the direct method,rounding all dollar amounts to the nearest whole dollar. b)Prepare a schedule to allocate Service Department costs to Operating Departments by the step-down method,allocating Building Services first,and rounding all amounts to the nearest whole dollar.

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

Quality of conformance is the degree to which an actual product meets its design specifications and is free of defects or other problems that may affect appearance or performance.

What would be a good example of a common cost that normally could NOT be assigned to products on a segmented income statement except on an arbitrary basis?

The following information is available on Company B: Sales \ 950,000 Operating Income \ 56,000 Shareholders' Equity \ 100,000 Average Operating Assets \ 190,000 Minimum Required Rate of Return 20\% -What is Company B's return on investment (ROI)rounded to the nearest dollar?

Hancock Company has two Service Departments-Factory Administration and Maintenance-and two Producing Departments.Selected information relating to these departments follow:

All other things equal,which of the following events would generally cause an increase in a company's return on investment (ROI)?

The Axle Division of LaBate Company makes and sells only one product. Annual data on the Axle Division's single product follow: Unit Selling Price \ 50 Unit Variable Cost \ 30 Total Fixed Costs \ 200,000 Average Operating Assets \ 750,000 Minimum Required Rate of Return 12\% -If Axle sells 16,000 units per year,what would be the return on investment?

Delta Manufacturing Company has two Service Departments-Custodial Services and Maintenance-and three Production Departments-Cutting,Milling,and Assembly.Delta allocates the cost of Custodial Services on the basis of square metres and Maintenance on the basis of labour hours.Budgeted operating data for the year just completed follow: Required: a)Prepare a schedule to allocate Service Department costs to the Production Departments by the direct method,rounding all dollar amounts to the nearest whole dollar. b)Prepare a schedule to allocate Service Department costs to the Production Departments by the step-down method,allocating Custodial Services first,and rounding all amounts to the nearest whole dollar.

The following selected data pertain to Beck Co.'s Beam Division for last year: Sales \ 400,000 Variable Expenses \ 100,000 Traceable Fixed Expenses \ 250,000 Average Operating Assets \ 200,000 Minimum Required Rate of Return 20\% -What was the return on investment?

The following data are available for the North Division of Chemicals Products,Inc.and the single product it makes: Unit Selling Price \ 25 Variable Cost per Unit \ 15 Annual Fixed Costs \ 320,000 Average Operating Assets \ 1,500,000 How many units must South sell each year to have an ROI of 18%?

Eade Company's quality cost report is to be based on the following data: Systems development \ 32,000 Final product testing and inspection \ 13,000 Quality data gathering, analysis, and reporting \ 11,000 Net cost of scrap \ 62,000 Returns arising from quality problems \ 59,000 Amortization of test equipment \ 57,000 Rework labour and overhead \ 18,000 Test and inspection of incoming materials \ 40,000 Product recalls \ 36,000 - What will be the total appraisal cost appearing on the quality cost report?

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?