Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Textbook Question
Chapter 1, Problem 18P
PROBLEM 1-18 Direct and Indirect Costs; variable Costs LO1−1, LO1−4
The following cost data pertain to the operations of Montgomery Department Stores, Inc. for the month of July.
| Corporate legal office salaries | $56,000 |
| Apparel Department cost of sales—Evendale Store | $90,000 |
| Corporate headquarters building lease | $48,000 |
| Store manager’s salary—Evendale Store | $12,000 |
| Apparel Department sales commission—Evendale Store | $7,000 |
| Store utilities—Evendale Store | $11,000 |
| Apparel Department manager’s salary—Evendale Store | $8,000 |
| Central warehouse lease cost | $15,000 |
| Janitorial costs—Evendale Store | $9,000 |
The Evendale Store is one of many stores owned and operated by the company. The Apparel Department is one of many departments at the Evendale Store. The central warehouse serves all of the company’s stores.
Required:
- What is the total amount of the costs listed above that are direct costs of the Apparel Department?
- What is the total amount of the costs listed above that are direct costs of the Evendale Store?
- What is the total amount of the Apparel Department’s direct costs that are also variable costs with respect to total departmental sales?
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Problem 1-18 (Algo) Direct and Indirect Costs; Variable Costs [LO1-1, LO1-4]
The following cost data pertain to the operations of Montgomery Department Stores, Inc., for the month of
July.
Corporate legal office salaries.
Apparel Department cost of sales-Evendale Store
Corporate headquarters building lease
Store manager's salary-Evendale Store
Apparel Department sales commission-Evendale Store
Store utilities-Evendale Store
Apparel Department manager's salary-Evendale Store
Central warehouse lease cost
Janitorial costs-Evendale Store
$
$
$
$
$
1. Total direct costs for the Apparel Department
2 Total direct costs for the Evendale Store
3. Total direct costs for the Apparel Department that are also variable costs
$
64,800
101,500
75,600
15,000
8,450
14,900
8,550
20,900
11,000
The Evendale Store is just one of many stores owned and operated by the company. The Apparel
Department is one of many departments at the Evendale Store. The central warehouse serves all of the
company's stores.…
Problem 1-18 (Algo) Direct and Indirect Costs; Variable Costs [LO1-1, LO1-4]
The following cost data pertain to the operations of Montgomery Department Stores, Incorporated, for the month of July.
Corporate legal office salaries
Apparel Department cost of sales-Evendale Store
Corporate headquarters building lease
$ 78,600
$ 109,500
$ 58,200
$ 18,600
Store manager's salary-Evendale Store
Apparel Department sales commission-Evendale Store
Store utilities-Evendale Store
Apparel Department manager's salary-Evendale Store
Central warehouse lease cost
Janitorial costs-Evendale Store
$ 10,700
$ 16,100
$ 8,150
$ 20,400
$ 13,000
The Evendale Store is one of many stores owned and operated by the company. The Apparel Department is one of many departments
at the Evendale Store. The central warehouse serves all of the company's stores.
Required:
1. What is the total amount of the costs listed above that are direct costs of the Apparel Department?
2. What is the total amount of the costs listed…
Question 2: Bed and Bath, a retailing company has two departments, Hardware and Linens. The company's most recent
monthly contribution format income statement is given below:
Department
Total
Hardware
Linens
Sales
$40,00,000
$30,00,000
$10,00,000
Variable expenses
13,00,000
9,00,000
4,00,000
Contribution Margin
Fixed expenses
21,00,000
14,00,000
$700,000
600,000
27,00,000
22,00,000
$5,00,000
800,000
($200,000)
Net Operating Income
A study indicates that, $340,000 of the fixed expenses charged to Lines are sunk costs or allocated cost that will continue to
incur even if the Linens department is dropped. In addition, the elimination of the Lines department will result in a 10% increase
in the sales of the Hardware department.
Required : If the Linens Department is dropped, what will be the effect on the net operating income of the company as a
whole?[
Chapter 1 Solutions
Managerial Accounting
Ch. 1 - Prob. 1QCh. 1 - Define the following: (a) direct materials, (b)...Ch. 1 - Explain the difference between a product cost and...Ch. 1 - Distinguish between (a) a variable cost, (b) a...Ch. 1 - Prob. 5QCh. 1 - Define the following terms: (a) cost behavior and...Ch. 1 - What is meant by an activity base when dealing...Ch. 1 - Prob. 8QCh. 1 - Distinguish between discretionary fixed costs and...Ch. 1 - Does the concept of the relevant range apply to...
Ch. 1 - What is the difference between a traditional...Ch. 1 - Prob. 12QCh. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 1AECh. 1 - Prob. 2AECh. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - L012, L013, L014, L015, L016 Martinez Company’s...Ch. 1 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 1 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - EXERCISE 1—1 Identifying Direct and Indirect Costs...Ch. 1 - EXERCISE 1-2 Classifying Manufacturing Costs LO1-2...Ch. 1 - EXERCISE 1-3 Classifying Costs as Product or...Ch. 1 - EXERCISE 14 Fixed and Variable Cost Behavior LO14...Ch. 1 - Prob. 5ECh. 1 - EXERCISE 1—6 Traditional and Contribution Format...Ch. 1 - Prob. 7ECh. 1 - EXERCISE 18 Product Costs and Period Costs;...Ch. 1 - Prob. 9ECh. 1 - Prob. 10ECh. 1 - EXERCISE 1—11 Cost Behavior; Contribution Format...Ch. 1 - EXERCISE 1-12 Product and Period Cost Flows LO1–3...Ch. 1 - Prob. 13ECh. 1 - EXERCISE 1-14 Cost Classification 1O1–2, LO1–3,...Ch. 1 - Prob. 15ECh. 1 - EXERCISE 1–16 Cost Classifications for Decision...Ch. 1 - EXERCISE 1-17 Classifying Variable and Fixed Costs...Ch. 1 - PROBLEM 1-18 Direct and Indirect Costs; variable...Ch. 1 - PROBLEM 1-19 Traditional and Contribution Format...Ch. 1 - PROBLEM 120 Variable and Fixed Costs; Subtleties...Ch. 1 - Prob. 21PCh. 1 - Prob. 22PCh. 1 - PROBLEM 123 Cost Classification LO11, LO13, LO14...Ch. 1 - PROBLEM 1-24 Different Cost Classifications for...Ch. 1 - Prob. 25PCh. 1 - CASE 1-26 Cost Classification and Cost Behavior...Ch. 1 - Prob. 27C
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