Exam 24: Departmental Accounting

Sports apparel department's gross profit is $300,000; clothing department gross profit is $200,000; indirect advertising expense is $6,000. Indirect expense charged to the sports apparel department based on gross profit would be $3,600.

If the cosmetic department in the store measures 10,000 square feet and the total building cost is $30,000 for a 40,000 square foot building, the cost that would be allocated to the cosmetic department would be:

Advertising totaled $10,000; $3,000 was indirect. What would be the best choice to use to allocate the indirect cost?

The data processing department of a tax firm would be a profit center.

A profit center and a cost center both generate costs.

Eliminating one department may increase the sales of another department.

From the following partial data, prepare a departmental income statement showing income before tax along with net income for Mason Corporation for the month ended December 31. Income Tax Rate is 30% Sporting Goods Dept.-5,000 square feet Shoe Dept.-3,000 square feet The following items are indirect expenses and should be allocated:

Direct expenses are assigned to departments based on the actual expenses incurred.

Which allocation base is best used to allocate advertising expense by selling department?

A department income statement showing gross profit by department is a useful tool in analyzing performance of individual departments.

Julia Company allocates its indirect advertising expenses based on each department's gross sales. If the men's apparel department has gross sales of $225,000 out of a total of $2,025,000 in gross sales, what fraction would Julia use to allocate its indirect advertising expenses?

To calculate gross profit, subtract cost of goods sold and operating expenses from net sales.

Sales minus cost of goods sold yields:

A department with sales of $80,000 and cost of goods sold of $55,000 has a gross profit of $25,000.

The accountant must always consider operating expenses, such as rent and advertising, when determining gross profit for a department.

Explain the difference between a "cost center" and a "profit center."

The photography department in a department store experienced the following revenue and expenses during October: The photography departmental net income is:

Departmental reports are useful for all of the following purposes except:

Below is a list of expenses (direct and indirect). You are to determine the total direct cost for departments A and B. Depreciation Expense - Depreciation Expense - Direct cost for department A $ ________ B $ ________

A common way to apportion janitorial expense is to base it on gross sales.