a. What are the budgeted operating profits in each division for year 1 after the corporate costs are allocated?b. At the end of year 1, actual corporate costs incurred were $3.7 million. Of the $3.7 million, $1.44 million was fixed, $1.3 million wasvariable with respect to revenues, and $0.96 million was variable with respect to FTEs. Actual division results in year 1, prior to anyallocation, are as follows:Employees (FTE)Revenues ($000)Direct costs ($000)AgricultureMining2555$ 10,4007,400$ 3,000$ 15,60013,600$ 2,000Operating profit before allocation ($000)What are the actual (reported) operating profits in each division for year 1 after the corporate costs are allocated?Complete this question by entering your answers in the tabs below.Required A Required BWhat are the budgeted operating profits in each division for year 1 after the corporate costs are allocated?Note: Do not round intermediate calculations. Enter your answers in thousands of dollars.RevenuesDirect costsOperating profit before allocationsSA$Corporate costsOperating profitAgricultureMiningSA0$0$SATotal0000$0$0 $0

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Answered: a. What are the budgeted operating…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 5E: Service department charges In divisional income statements prepared for Demopolis Company, the...

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Cost Department Allocations In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $64,560, and the Purchasing Department had expenses of $40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial Government ContractSales $2,000,000 $3,250,000 $2,900,000 Number of employees:Weekly payroll (52 weeks per year) 400 250 150 Monthly payroll 80 30 10 Number of purchase requisitions per year 7,500 3,000 2,000 (See image for questions)
Cost Department Allocations In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $64,560, and the Purchasing Department had expenses of $40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial Government Contract Sales $2,000,000 $3,250,000 $2,900,000 Number of employees: Weekly payroll (52 weeks per year) 400 250 150 Monthly payroll 80 30 10 Number of purchase requisitions per year 7,500 3,000 2,000 Required: a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential…
(17) Assume that divisional income from operations amounts to $220,000, and top management has established 13% as the minimum acceptable return on divisional assets totaling $1,077,000. The residual income for the division is?
3. In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $64,560, and the Purchasing Department had expenses of $40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial Government Contract Sales $2,000,000 $3,250,000 $2,900,000 Number of employees: Weekly payroll (52 weeks a year) Monthly Payroll Number of purchase requisitions per year 410 210 160 75 35 15 7,400 3,000 2,000 a. Determine the total dollar amount of payroll checks and purchase requisitions processed per year by the company and each division. ing the activity base information in (a), determine the annual dollar amount of payroll and…
Service Department Charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $32,536, and the Purchasing Department had expenses of $14,500 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $ 303,000 $ 402,000 $ 922,000 Number of employees: Weekly payroll (52 weeks per year) 125 80 85 Monthly payroll 30 41 28 Number of purchase requisitions per year 2,100 1,500 1,400 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential…
Service Department Charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $77,376, and the Purchasing Department had expenses of $39,530 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $ 826,000 $ 1,095,000 $ 2,514,000 Number of employees: Weekly payroll (52 weeks per year) 220 60 65 Monthly payroll 36 47 34 Number of purchase requisitions per year 2,800 2,000 1,900 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential…
Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division for the year ended December 31 are as follows: Division A Division B Revenues $190,000 $125,500 Operating expenses 112,500 92,750 Support department allocations 29,500 12,625 Invested assets 225,000 99,000 a. Prepare condensed income statements for the past year for each division. Deferred expense Invested assets Operating income before support department allocations Revenues Support department allocations Bentz Co. Divisional Income Statements For the Year Ended December 31 Division A Division B $fill in the blank 9c7615fbffbd07a_2 $fill in the blank 9c7615fbffbd07a_3 fill in the blank 9c7615fbffbd07a_5 fill in the blank 9c7615fbffbd07a_6 $fill in the blank 9c7615fbffbd07a_8 $fill in the blank 9c7615fbffbd07a_9 fill in the blank 9c7615fbffbd07a_11 fill in the blank 9c7615fbffbd07a_12 Operating income…
Burwell Manufacturing is organized into two divisions (Agriculture and Mining) and a corporate headquarters. The financial group of the corporate staff prepared financial operating plans (budgets) for the two divisions for the upcoming year (year 1). Selected information from the plans is as follows: Employees (full-time equivalent, or FTE) Revenues ($000) Direct division costs ($000) Operating profit before allocation ($000) Agriculture 23 $ 8,000 5,200 $ 2,800 Mining 52 $ 17,000 13,300 $ 3,700 Corporate overhead costs are expected to be $3.5 million in year 1. Of the $3.5 million, $1.25 million is fixed and the remainder is variable. Two-thirds of the variable cost is variable with respect to revenue. The other third is variable with respect to the number of full-time equivalent (FTE) employees. Division managers are evaluated and compensated in part on division operating profit (including any allocated corporate costs) relative to the budget. Corporate overhead at Burwell is…
Use the following information for Exercises 11-31 and 11-32: Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last years results: Washingtons actual cost of capital was 12%. Exercise 11-32 Residual Income Refer to the information for Washington Company above. In addition, Washington Companys top management has set a minimum acceptable rate of return equal to 8%. Required: 1. Calculate the residual income for the Adams Division. 2. Calculate the residual income for the Jefferson Division.
The following selected data pertain to the Argent Division for last year: Required: 1. How much is the residual income? 2. How much is the return on investment? (Rounded to four significant digits.)
Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division for the year ended December 31 are as follows: Division A Division B Revenues $190,000 $125,500 Operating expenses 112,500 92,750 Support department allocations 29,500 12,625 Invested assets 225,000 99,000 a. Prepare condensed income statements for the past year for each division. b. Using the DuPont formula, determine the profit margin, investment turnover, and return on investment (ROI) for each division. Round the profit margin percentage to two decimal places, the investment turnover to four decimal places, and the return on investment to one decimal place.
Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,200,000; sales of $4,625,000; cost of goods sold of $2,650,000; and operating expenses of $1,472,000. Assume a target income of 10% of average invested assets. Compute residual income for the division: Multiple Choice $197,500. $50,300. () $83,000. $40,500. $93,000.

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