Question 1

You have been hired by Jones to allocate his utilities to each department based on space (in square footage).
Complete the assignment.

Accepted Answer

Utilities Cost
Shoe: (12,000/4

Question 2

Compute the contribution margin for the video department, when gross profit is $880,000, direct expenses $370,000, and indirect expenses are $190,000.

Accepted Answer

A) $320,000 
B) $690,000 
C) $510,000 
D) $700,000 
A) $320,000 
B) $690,000 
C) $510,000 
D) $700,000

Question 3

Most companies that prepare departmental income statements also prepare departmental balance sheets.

Accepted Answer

A) True 
 B)False

Question 4

The candy department experienced the following revenue and expenses during October:   The candy departmental net income is:

Accepted Answer

A) $6,400. 
B) $3,500. 
C) $4,200. 
D) $5,300. 
A) $6,400. 
B) $3,500. 
C) $4,200. 
D) $5,300.

Question 5

If the property, plant, and equipment can be traced to a specific department, depreciation expense is a(n):

Accepted Answer

A) direct expense. 
B) indirect expense. 
C) cash expense. 
D) sales expense. 
A) direct expense. 
B) indirect expense. 
C) cash expense. 
D) sales expense.

Question 6

A department with sales of $120,000; cost of goods sold of $75,000; and operating expenses of $20,000 has a gross profit of $25,000.

Accepted Answer

A) True 
 B)False

Question 7

A line on the income statement that indicates what a department has left after covering cost of goods and sold and direct expenses is:

Accepted Answer

A) the gross margin. 
B) the net income. 
C) the contribution margin. 
D) None of these answers are correct. 
A) the gross margin. 
B) the net income. 
C) the contribution margin. 
D) None of these answers are correct.

Question 8

The espresso department experienced the following revenue and expenses during October:   The espresso departmental gross profit on sales is:

Accepted Answer

A) $2,000. 
B) $4,000. 
C) $8,000. 
D) $11,000. 
A) $2,000. 
B) $4,000. 
C) $8,000. 
D) $11,000.

Question 9

Given the following, calculate contribution margin and net income:

Accepted Answer

The answer of Given the following, calculate contribution margin and...

Question 10

If delivery expense is not traceable to a department, it would be considered a(n):

Accepted Answer

A) direct expense. 
B) indirect expense. 
C) profit center issue. 
D) cost center issue. 
A) direct expense. 
B) indirect expense. 
C) profit center issue. 
D) cost center issue.

Question 11

Indirect expenses are subjective in nature and may be allocated in a number of ways.

Accepted Answer

A) True 
 B)False

Question 12

Departmental income statements would not be a useful to tool for management to determine the viability of a department.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following would be a direct expense of a sales department?

Accepted Answer

A) Sales salaries 
B) Office salaries 
C) Advertising expense 
D) Sales salaries and Advertising expense 
A) Sales salaries 
B) Office salaries 
C) Advertising expense 
D) Sales salaries and Advertising expense

Question 14

Indirect expenses are the same across departments and industries.

Accepted Answer

A) True 
 B)False

Question 15

A unit or department that incurs costs and generates revenues is a(n):

Accepted Answer

A) expense center. 
B) direct center. 
C) cost center. 
D) profit center. 
A) expense center. 
B) direct center. 
C) cost center. 
D) profit center.

Question 16

Why would it be advisable for a company to keep separate accounting records for various departments?

Accepted Answer

Management needs to measure the efficien

Question 17

What is the total gross profit of the company if there are three departments (A, B, and C)and the net sales are $200,000, $164,000, and $286,000, respectively, and cost of goods sold is $86,000, $92,000, and $82,000, respectively?

Accepted Answer

A) $390,000 
B) $650,000 
C) $400,000 
D) $260,000 
A) $390,000 
B) $650,000 
C) $400,000 
D) $260,000

Question 18

If gross sales for the tools department are $500,000 and gross sales for the appliances department are $300,000, what is the fraction used to apportion the indirect advertising for the appliances department if it is based on gross sales?

Accepted Answer

A) 1/2 
B) 1/3 
C) 3/8 
D) 2/3 
A) 1/2 
B) 1/3 
C) 3/8 
D) 2/3

Question 19

Hawkeye Golf is considering dropping the clothing department because it is not generating a profit as disclosed by the following data:
   Note: None of the indirect expenses can be avoided by dropping the department.
Should Hawkeye drop the department? Show your computations.

Accepted Answer

At this point the department is contribu

Question 20

Direct expenses and indirect expenses are separated in determining contribution margin.

Accepted Answer

A) True 
 B)False

Exam 24: Departmental Accounting

You have been hired by Jones to allocate his utilities to each department based on space (in square footage). Complete the assignment.

Compute the contribution margin for the video department, when gross profit is $880,000, direct expenses $370,000, and indirect expenses are $190,000.

Most companies that prepare departmental income statements also prepare departmental balance sheets.

The candy department experienced the following revenue and expenses during October: The candy departmental net income is:

If the property, plant, and equipment can be traced to a specific department, depreciation expense is a(n):

A department with sales of $120,000; cost of goods sold of $75,000; and operating expenses of $20,000 has a gross profit of $25,000.

A line on the income statement that indicates what a department has left after covering cost of goods and sold and direct expenses is:

The espresso department experienced the following revenue and expenses during October: The espresso departmental gross profit on sales is:

Given the following, calculate contribution margin and net income:

If delivery expense is not traceable to a department, it would be considered a(n):

Indirect expenses are subjective in nature and may be allocated in a number of ways.

Departmental income statements would not be a useful to tool for management to determine the viability of a department.

Which of the following would be a direct expense of a sales department?

Indirect expenses are the same across departments and industries.

A unit or department that incurs costs and generates revenues is a(n):

Why would it be advisable for a company to keep separate accounting records for various departments?

What is the total gross profit of the company if there are three departments (A, B, and C)and the net sales are $200,000, $164,000, and $286,000, respectively, and cost of goods sold is $86,000, $92,000, and $82,000, respectively?

If gross sales for the tools department are $500,000 and gross sales for the appliances department are $300,000, what is the fraction used to apportion the indirect advertising for the appliances department if it is based on gross sales?

Hawkeye Golf is considering dropping the clothing department because it is not generating a profit as disclosed by the following data: Note: None of the indirect expenses can be avoided by dropping the department. Should Hawkeye drop the department? Show your computations.

Direct expenses and indirect expenses are separated in determining contribution margin.

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes: the Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Manufacturing Accounting

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