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Exam 24: Departmental Accounting

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Question 61

Multiple Choice

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

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

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Question 62

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

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Question 63

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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 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.

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.

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.

Indirect expenses are the same across departments and industries.

Given the following, calculate contribution margin and net income:

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

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

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

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

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

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

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

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

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

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

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?