Lisa Hansen is the manager of American Autos. American Autos provides three types of services, Sales, Repairs, and Rebuilds. Lisaneeds to provide a profit analysis to the CEO at the end of the current fiscal year so the pricing and marketing strategies can beadjusted as needed. She has gathered the following information for the companyCost#of employeesMaint HoursHR HoursRevenue(a)Marketing$207,000SalesRepairs S5Rebuilds S50100SalesRepairs$996.000 $1,307,000Support DepartmentsMaintenance$317,000730025HR$53,000Rebuilds$2.110,000225180Sales$359,0001201001.200Operating UnitsRepairs$871,000161,900850Rebuilds$1.108.0006Allocate the support department costs to the operating units using the reciprocal method. (Do not round the intermediatecalculations. Round answers to O decimal places, a 5.275)2.600800p

According to the question given, we need to prepare the overhead distribution summary.Meaning of…

Lisa Hansen is the manager of American Autos American Autos provides three types of services, Sales, Repairs, and Rebuilds. Lisa needs to provide a profit analysis to the CEO at the end of the current fiscal year so the pricing and marketing strategies can be adjusted as needed. She has gathered the following information for the company Cost #of employees Maint Hours: HR Hours Revenue Sales Repairs Marketing $207,000 Rebuilds Sales $996.000 Support Departments Maintenance $317,000 5 50 100 Repairs $1.307,000 7 300 25 HR $53,000 Rebuilds $2.110,000 2 25 180 Sales $359,000 12 800 1.200 Operating Units Repairs $871.000 16 1.900 850 Rebuilds $1.108.000 (a) Allocate the support department costs to the operating units using the reciprocal method. (De not round the intermediate calculations. Round answers to O decimal places, eg 5,2753 2,600 800

Lisa Hansen is the manager of American Autos American Autos provides three types of services, Sales, Repairs, and Rebuilds. Lisa needs to provide a profit analysis to the CEO at the end of the current fiscal year so the pricing and marketing strategies can be adjusted as needed. She has gathered the following information for the company Cost #of employees Maint Hours: HR Hours Revenue Sales Repairs Marketing $207,000 Rebuilds Sales $996.000 Support Departments Maintenance $317,000 5 50 100 Repairs $1.307,000 7 300 25 HR $53,000 Rebuilds $2.110,000 2 25 180 Sales $359,000 12 800 1.200 Operating Units Repairs $871.000 16 1.900 850 Rebuilds $1.108.000 (a) Allocate the support department costs to the operating units using the reciprocal method. (De not round the intermediate calculations. Round answers to O decimal places, eg 5,2753 2,600 800

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

See similar textbooks

Similar questions

Classify each of the following actions as either being associated with the financial accounting information system (FS) or the cost management information system (CMS): a. Determining the total compensation of the CEO of a public company b. Issuing a quarterly earnings report c. Determining the unit product cost using TDABC d. Calculating the number of units that must be sold to break even e. Preparing a required report for the SEC f. Preparing a sales budget g. Using cost and revenue information to decide whether to keep, or drop, a product line h. Preparing an annual statement of financial position that conforms to generally accepted accounting principles (GAAP) i. Using cost and revenue information to decide whether to invest in a new production system or not j. Reducing costs by improving the overall quality of a product k. Using a debt-equity ratio and liquidity ratios from a balance sheet to assess the likelihood of bankruptcy l. Using a public companys financial statements to decide whether or not to buy its stock
GRB Ltd has several product lines with a manager in charge of each product line. The managers are paid a bonus based on the net income generated by their product line. Rubica (the CEO of GRB Ltd) was going through the financial reports of the 2nd quarter of 2021 to analyse the performance of the product lines. For 'Sweets' one of the largest product lines of GRB Ltd, Rubica noted that while the sales declined from $800,000 in quarter 1 to $600,000 in quarter 2, the product line manager of Sweets received a bonus larger than the 1st quarter. The manager of Sweets division was eligible for a higher bonus due to an operating profit increase from $90,000 in the 1st quarter to $120,000 in the 2nd quarter. Rubica wondered how the product line manager was entitled to a higher bonus with a decline in sales. Rubica also wants to know how net income increased with a decline in sales. Rubica found the following data from the financial reports of 'Sweets': Particulars Quarter 2 Quarter 1 Units…
At the conclusion of her first month of operating Val's Donut Shop, Val computed the following revenue and expense figures: week revenue expenses profit 1 44,725 38,090 2 57,380 26,123 3 63,090 43,957 4 67,255.50 74,310 month to receive 60,000 profit for the month month Prepare both weekly and monthly profit formulas so that Val has a good idea about her current profit situation. Also, given her sales for the month, tell her how much her ideal expense should have been to realize her desired profit of ₱60,000.00
Susan Hansen is the manager of American Autos. American Autos provides three types of services, Sales, Repairs, and Rebuilds. Susan needs to provide a profit analysis to the CEO at the end of the current fiscal year so the pricing and marketing strategies can be adjusted as needed. She has gathered the following information for the company. Cost # of employees Maint Hours HR Hours: Revenue Marketing $219,000 Sales $992,000 5 50 100 Support Departments Maintenance $320,000 Repairs $1,302,000 7 300 25 HR $49,000 Rebuilds $2,108,000 2 25 180 Sales $364,000 12 800 1,200 Operating Units Repairs $870,000 16 1,900 Rebuilds $1,098,000 6 2,600 800
Munoz Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Segment Sales Cost of goods sold Sales commissions MUNOZ COMPANY Income Statements for Year 2 Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) Complete this question by entering your answers in the tabs below. A $ 171,000 (123,000) Required A Required B Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A $251,000 $256,000 (91,000) (81,000) (24,000) (23,000) 152,000 (40,000) 0 136,000 (17,000) 31,000 (34,000) (42,000) (6,000) (16,000) $ (9,000) $ 78,000 Required a. Prepare a schedule of relevant sales and costs for Segment A. b. 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…
You have recently been appointed as the accountant attached to the head office of the company with the specific responsibility of monitoring the performance of the companies within the group. Each company is treated as an investment center and every month produces an operating statement for the group headquarters. Summaries of the statements for companies A and B which make similar products selling at similar prices for the last month showed a typical situation. Extract from the company monthly operating statements. A B GHS000 GHS000 Sales 600 370 Less variable cost 229 208 Contribution 371 162 Less controllable fixed overheads…
The following is a summarized income statement for McClaron Manor Co.'s profit center 12608 for April: Contribution Margin $ 176,000 Period Expenses $ 12,000 Manager' s Salary $ 2,100 Corporate Expense Allocation $ 8,100 $ (22,200 ) Net Income $ 153,800 Which of the following amounts is most likely subject to the control of the profit center's manager? (CPA, adapted) Multiple Choice Contribution Margin of $176,000 and Period Expenses of $14,100. Contribution Margin of $176,000. Contribution Margin of $176,000 and Period Expenses of $22,200. Contribution Margin of $176,000 and Period Expenses of $12,000.
The Deluxe Division, a profit center of Riley Manufacturing Company, reported the following data for the first quarter of 2016:Sales $9,000,000Variable costs 6,300,000Controllable direct fixed costs 1,200,000Noncontrollable direct fixed costs 530,000Indirect fixed costs 300,000Instructions(a) Prepare a performance report for the manager of the Deluxe Division.(b) What is the best measure of the manager’s performance? Why?(c) How would the responsibility report differ if the division was an investment center?
Fence Industries is preparing its annual profit plan. As part of its analysis of the profitability of its customers, management estimates that the $15,000 for sales support should be assigned to the individual customers from the information given as follows: Multiple Choice Units purchased Purchase orders (annually) What is the amount of the sales support costs that should be allocated to Customer B, assuming Fence uses purchases orders to compute activity-based costs? $3,000 $6,000 $9,000 Customer A 200,000 $12,000 Customer B 300,000 32 8
Improvement Station is a national home improvement chain with more than 100 stores throughout the country. The manager of each store receives a salary plus a bonus equal to a percent of the store’s net income for the reporting period. The following net income calculation is on the Denver store manager’s performance report for the recent monthly period. Sales . $2,500,000 Cost of goods sold . 800,000 Wages expense 500,000 Utilities expense 200,000 Home office expense . . . . . . . . . . . . . . 75,000 Net income . $ 925,000 Manager’s bonus (0.5%) $ 4,625 In previous periods, the bonus had also been 0.5%, but the performance report had not included any charges for the home office expense, which is now assigned to each store as a percent of its sales. Required Assume that you are the national office manager. Write a half-page memorandum to your store managers explaining why home office expense is in the new performance report.
B-You is a consulting firm that works with managers to improve their interpersonal skills. Recently, a representative of a high-tech research firm approached B-You's owner with an offer to contract for one year with B-You to improve the interpersonal skills of a newly hired manager. B-You reported the following costs and revenues during the past year (before the proposed contract). B-YOU Annual Income Statement Sales revenue $ 560,000 Costs Labor 260,000 Equipment lease 42,000 Rent 35,000 Supplies 30,000 Officers' salaries 160,000 Other costs 20,000 Total costs $ 547,000 Operating profit (loss) $ 13,000 If B-You decides to take the contract to help the manager, it will hire a full-time consultant at $85,500. The equipment lease will increase by 20 percent. Supplies will increase by an estimated 10 percent and other costs by 15 percent. The existing building has space for the new consultant. No new offices will be necessary for this work.
B-You is a consulting firm that works with managers to improve their interpersonal skills. Recently, a representative of a high-tech research firm approached B-You's owner with an offer to contract for one year with B-You to improve the interpersonal skills of a newly hired manager. B-You reported the following costs and revenues during the past year. B-YOU Annual Income Statement Sales revenue $ 234,300 Costs Labor 111,000 Equipment lease 16,000 Rent 13,500 Supplies 10,300 Officers' salaries 70,000 Other costs 7,000 Total costs $ 227,800 Operating profit (loss) $ 6,500 If B-You decides to take the contract to help the manager, it will hire a full-time consultant at $84,000. Equipment lease will increase by 5 percent. Supplies will increase by an estimated 10 percent and other costs by 15 percent. The existing building has space for the new consultant. No new offices will be necessary for this work. Problem 1-44 (Algo) Part a…