Exercise 15-37 (Algo) Segment Reporting (LO 15-5) Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclos Before transactions between the two divisions are considered, revenues and costs are as follows: Casino Hotel $34, 000, 000 $27,000, 000 17, 000, 000 Revenues Costs 14, 000, 000 The casino and the hotel have a joint marketing arrangement by which the hotel gives coupons redeemable at casino slot machin and the casino gives discount coupons good for stays at the hotel. The value of the coupons for the slot machines redeemed dur the past year totaled $6,000,000. The discount coupons redeemed at the hotel totaled $1,000,000. As of the end of the year, all coupons for the current year expired. Required: the joint marketing agreement?

Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A   B   C Sales $ 330,000     $ 480,000     $ 500,000   Cost of goods sold   (242,000 )     (184,000 )     (190,000 ) Sales commissions   (30,000 )     (44,000 )     (44,000 ) Contribution margin   58,000       252,000       266,000   General fixed operating expenses (allocation of president’s salary)   (92,000 )     (92,000 )     (92,000 ) Advertising expense (specific to individual divisions)   (6,000 )     (20,000 )     0   Net income (loss) $ (40,000 )   $ 140,000     $ 174,000     Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising…

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Exercise 15-34 (Algo) Evaluate Transfer Pricing System: Negotiated Rates (LO 15-2, 3) Tops Corporation is organized into two divisions, Manufacturing and Marketing. Both divisions are considered to be profit centers and the two division managers are evaluated in large part on divisional income. The company makes a single product. It is fabricated in Manufacturing and then packaged and sold in Marketing. There is no intermediate market for the product. The monthly income statements, in thousands of dollars, for the two divisions follow. Production and sales amounted to 15,000 units. Revenues Variable costs Contribution margin Fixed costs Manufacturing $4,500 3,900 $. Marketing $15, 000 6,700 $ 8,300 600 300 800 Divisional profit $. 300 $ 7,500 Assume there is no speclal order pending. Required: a. What transfer price would you recommend for Tops Corporation? b. Using your recommended transfer price, what will be the income of the two divisions, assuming monthly production and sales of…

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Hh2.

Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost Using Department Transactions IT Operations Retail Commercial Ө Ө 70% 30% 10% Ө 20% 30% 40% 50% Ө Ө 10% 40% $ 390,000 $ 810,000 $ 1,650,000 $ 3,850,000 $ 2,400,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. From: Costs Operations Allocated to: Transactions Retail Commercial IT $ 810,000 $ 162,000 $ 81,000 $ 243,000 $ 324,000 Operations Transactions Total $ 243,000 $ 324,000