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Exam 24: Performance Measurement and Responsibility Accounting

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Question 51

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Renton Co.has two operating (production)departments supported by a number of service departments.The following information was collected for a recent period: Indirect costs are allocated as follows: salaries on the basis of sales,office expenses on the basis of the number of employees,and all other costs on the basis of square footage.Additional information about the production departments follows: Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796.Determine the departmental contribution to overhead and the departmental net income for each production department.

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Question 52

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Departmental wage expenses are direct expenses of that department.

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Question 53

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Costs that the manager has the power to determine or at least strongly influence are called:

Blower Company is divided into four departments.Departments A and B are service departments and Departments 1 and 2 are operating (production)departments.The services of the two service departments are used by the other departments as follows: Complete the following table:

Regardless of the system used in departmental cost analysis:

Departmental contribution to overhead is the same as gross profit generated by that department.

What is the cycle time for a manufacturer? What does it reveal about the manufacturing process?

Burien,Inc.,operates a retail store with two departments,A and B.Its departmental income statement for the current year follows: Burien allocates building depreciation,maintenance,and utilities on the basis of square footage.Office expenses are allocated on the basis of sales. Management is considering an expansion to a three-department operation.The proposed Department C would generate $120,000 in additional sales and have a 17.5% contribution to overhead.The company owns its building.Opening Department C would redistribute the square footage to each department as follows: A,19,040; B,21,760 sq.ft.; C,13,600.Increases in indirect expenses would include: maintenance,$500; utilities,$3,800; and office expenses,$1,200. Complete the following departmental income statements,showing projected results of operations for the three sales departments.(Round amounts to the nearest whole dollar.)

A responsibility accounting performance report displays:

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Stoneham.It reports the total amounts of direct and indirect expenses for the four departments.Purchasing department expenses are allocated to the operating departments on the basis of purchase orders.Maintenance department expenses are allocated based on square footage.Compute the amount of Purchasing department expense to be allocated to Fabrication.

A cost incurred in producing or purchasing two or more products at the same time is a(n) :

Cycle time is calculated by process time plus inspection time plus move time plus _____________.

The allocation bases for assigning indirect costs include:

Division P of Turbo Corporation has the capacity for making 75,000 wheel sets per year and regularly sells 60,000 each year on the outside market.The regular sales price is $100 per wheel set,and the variable production cost per unit is $65.Division Q of Turbo Corporation currently buys 30,000 wheel sets (of the kind made by Division P) yearly from an outside supplier at a price of $90 per wheel set.If Division Q were to buy the 30,000 wheel sets it needs annually from Division P at $87 per wheel set,the change in annual net operating income for the company as a whole,compared to what it is currently,would be:

Traditional two-stage cost allocation means that indirect costs are first allocated to both operating and service departments,then operating department costs are allocated to service departments.

What is the primary purpose for using a responsibility accounting system?

What is a cost center?

The following data is available for the Cleaning Services Department of Amitol Co. Required: Calculate departmental contribution to overhead for the Cleaning Services Department,including the department's contribution as a percentage of revenues.

A college uses advisors who work with all students in all divisions of the college.The most useful allocation basis for the salaries of these employees would likely be:

A ______________________________ accumulates and reports costs and expenses that a manager is responsible for,including budgeted amounts.