FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
You have been recently promoted to the divisional manager of Hadi Ltd (“the Company”), a company with 25 branches around the country. As a profit center, your division performance, is assessed by the head office on a monthly basis. The head office expects the controllable profit of your division to be at least 35% of sales. The following figures are related to your division for the month of June 2021:
Direct materials £50,000
Direct labour £40,000
Variable
Sales £200,000
Fixed overheads excluding depreciation £25,000
Head office cost allocation £16,000
Your division has no control at all over 80% of the depreciation, which relates to the non-current assets while 65% of the fixed overheads excluding depreciation are controllable at divisional level. The head office cost allocation relates to research and development expenditure.
Required:
- Using the monthly divisional performance statement, critically assess whether your division has achieved the required performance criteria set by the head office for the month of June 2021. You should include a computation of the divisional profit which distinguishes between controllable and non-controllable costs.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Microsoft uses residual income to evaluate the performance of its divisions. The company's minimum required rate of return is 11%. In January, the Cloud Computing Division had average operating assets of of $680,000 and net operating income of $46,200. What was the Cloud Computing Division 's residual income in January? -$6,660 -$28,600 $26,700 -$7,900arrow_forwardA company has two divisions, C and E; both are operating as a profit center. C charges E $35 per unit for each unit transferred to B. Other data follow:C's variable cost per unit $35C's fixed costs $25,000C's annual sales to B 15,000 unitsC's annual sales to outsiders 70,000 unitsC is planning to raise its transfer price to $45 per unit. Division E can purchase units at $43 each from outsiders, but doing so would idle C's facilities now committed to producing units for E. Division C cannot increase its sales to outsiders. From the perspective of the company as a whole, from whom should Division E acquire the units, assuming E's market is unaffected? a. Division C, but only at the variable cost per unit b. Outside vendors c. Division C, in spite of the increased transfer price d. Division C, but only until fixed costs are covered, then should purchase from outside vendorsarrow_forwardCool Sky reports the following for its first year of operations. The company produced 42,000 units and sold 34,000 units at a price of $150 per unit. Direct materials $ 66 per unit Direct labor $ 25 per unit Variable overhead $ 9 per unit Fixed overhead $ 546,000 per year Variable selling and administrative expenses $ 10 per unit Fixed selling and administrative expenses $ 105,000 per year Exercise 19-3 (Algo) Part 2b 2b. Assume the company uses variable costing. Prepare its income statement for the year under variable costing.arrow_forward
- A company has two service departments (S1 and S2) and two production departments (P1 and P2). Departmental data for January were as follows:arrow_forwardM/s Bright and Co. Had four departments A,B,C and D. Each department being managed by a departmental manager whose commission was 10% of the respective departmental profits, subject to a minimum of $ 6,000 in each case. Inter departmental transfers took place at a loaded price as follows : 10% above cost 20% 20% В 20% For the year ended 31st March, 2015 the firm had already prepared and closed the departmental Trading and Profit & Loss Account. Subsequently it was discovered that the closing stocks of departments had included interdepartmentally transferred goods at loaded price of cost price. From the following From Department A to Department A to C to C to В D D information prepare a statement recomputing the departmental profit or loss Deptt. A 2$ 38,000 (Loss) Deptt. B Deptt. C Deptt. D 50,400 (Profit) ( $22,000 from Deptt. A and $48,000 from Deptt. C) 1,08,000 (Profit) Final Profit/Loss 72,000 (Profit) Interdepartmental transfers included at loaded price in the departmental Stock…arrow_forwardPlease help me with all answers thankuarrow_forward
- The Casket Division of Saal Corporation had average operating assets of $1,020,000 and net operating income of $205,200 in January. The company uses residual income to evaluate the performance of its divisions, with a minimum required rate of return of 14%. Required: What was the Casket Division's residual income in January?arrow_forwardFrinner Company has two divisions, A and B, that reported the following results for October: Sales Variable expenses as a percentage of sales .... Segment margin .......... C. d. Division A £90,000 £31,000. £62,000. £93,000. £52,000 70% £2,000 Division B £150,000 If common fixed expenses were £31,000, total fixed expenses must have been a. b. 60% £23,000arrow_forwardDavenport Incorporated has two divisions, Howard and Jones. The following is the segmented income statement for the past month: Howard Jones Total Sales revenue $ 800,000 $ 600,000 $ 1,400,000 Variable costs 400,000 480,000 880,000 Contribution margin $ 400,000 $ 120,000 $ 520,000 Direct fixed costs 200,000 100,000 300,000 Segment margin $ 200,000 $ 20,000 $ 220,000 Fixed costs (allocated) 150,000 150,000 300,000 Net operating income (loss) $ 50,000 $ (130,000) $ (80,000) What would Davenport's income (loss) be if the Jones Division was dropped?arrow_forward
- Searchlight, Inc. uses ROI to evaluate operations and requires the return on its operating units to be 9%. Operating data for the Western division is shown below: Sales $1,000,000 Controllable margin 120,000 Total average assets 600,000 Fixed costs 60,000 How much is ROI for the year? A. 20% B. 17% C. 10% D. 30%arrow_forwardCathy Company has two divisions, L and M. During July, Division L had sales of $80,000, a contribution margin ratio of 30%, and a segment margin of $10,000. The company as-a-whole had sales of $200,000, a contribution margin ratio of 40%, and a segment margin for the two divisions totaling $30,000. If operating income for the company was $15,000 for the month, the traceable fixed costs in Division M must have been: O $56,000 $36,000 $15,000 O $20,000 O $50,000arrow_forwardImagination Corporation uses residual income to evaluate the performance of its divisions. Imagination's minimum required rate of return is 10%. In April, the Commercial Products Division had average operating assets of $105,000 and net operating income of $9,700. What was the Commercial Products Division's residual income in April? Multiple Choice $970. $(970). $800. $(800).arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education