Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 10, Problem 3DQ
To determine
Identify the activity base for the given services.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Differentiate between centralized and decentralized operations.
Differentiate between a profit center and an investment center.
3. Weyerhaeuser developed a system that assigns service department expenses to user divisions on the basis of actual services consumed by the division. Here are a number of Weyerhaeuser's activities in its central Financial Services Department:
Payroll
Accounts payable
Accounts receivable
Database administration—report preparation
For each activity, identify an activity base that could be used to charge user divisions for service.
What is the major shortcoming of using income from operations as a performance measure for investment centers?
In a decentralized company in which the divisions are organized as investment centers, how could a division be considered the least profitable even though it earned the largest amount of income from operations?
How does using the return on investment facilitate comparability between divisions of decentralized…
Differentiate between centralized and decentralized operations.
Differentiate between a profit center and an investment center.
Weyerhaeuser developed a system that assigns service department expenses to user divisions on the basis of actual services consumed by the division. Here are a number of Weyerhaeuser's activities in its central Financial Services Department:
Payroll
Accounts payable
Accounts receivable
Database administration—report preparation
What is the major shortcoming of using income from operations as a performance measure for investment centers?
In a decentralized company in which the divisions are organized as investment centers, how could a division be considered the least profitable even though it earned the largest amount of income from operations?
How does using the return on investment facilitate comparability between divisions of decentralized companies?
1. Differentiate between a profit center and an investment center.
2. Weyerhaeuser developed a system that assigns service department expenses to user divisions on the basis of actual services consumed by the division. Here are a number of Weyerhaeuser's activities in its central Financial Services Department:
Payroll
Accounts payable
Accounts receivable
Database administration—report preparation
For each activity, identify an activity base that could be used to charge user divisions for service.
What is the major shortcoming of using income from operations as a performance measure for investment centers?
In a decentralized company in which the divisions are organized as investment centers, how could a division be considered the least profitable even though it earned the largest amount of income from operations?
How does using the return on investment facilitate comparability between divisions of decentralized companies?
Why would a firm use a balanced scorecard in…
Chapter 10 Solutions
Managerial Accounting
Ch. 10 - Differentiate between centralized and...Ch. 10 - Differentiate between a profit center and an...Ch. 10 - Prob. 3DQCh. 10 - What is the major shortcoming of using operating...Ch. 10 - In a decentralized company in which the divisions...Ch. 10 - How does using the return on investment facilitate...Ch. 10 - (a) Explain how return on investment might lead a...Ch. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - When using the negotiated price approach to...
Ch. 10 - Budgetary performance for cost center Vinton...Ch. 10 - Support department allocations The centralized...Ch. 10 - Prob. 3BECh. 10 - Profit margin, investment turnover, and ROI Briggs...Ch. 10 - Residual income The Commercial Division of Galena...Ch. 10 - Prob. 6BECh. 10 - Budget performance reports for cost centers...Ch. 10 - The following data were summarized from the...Ch. 10 - For each of the following support departments,...Ch. 10 - Prob. 4ECh. 10 - Service department charges In divisional income...Ch. 10 - Varney Corporation, a manufacturer of electronics...Ch. 10 - Horton Technology has two divisions, Consumer and...Ch. 10 - Rocky Mountain Airlines Inc. has two divisions...Ch. 10 - Championship Sports Inc. operates two divisionsthe...Ch. 10 - Prob. 10ECh. 10 - The operating income and the amount of invested...Ch. 10 - Prob. 12ECh. 10 - The condensed income statement for the Consumer...Ch. 10 - The Walt Disney Company (DIS) has four business...Ch. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Materials used by the Instrument Division of...Ch. 10 - Prob. 18ECh. 10 - GHT Tech Inc. sells electronics over the Internet....Ch. 10 - Profit center responsibility reporting for a...Ch. 10 - Prob. 3PACh. 10 - Effect of proposals on divisional performance A...Ch. 10 - Divisional performance analysis and evaluation The...Ch. 10 - Prob. 6PACh. 10 - Prob. 1PBCh. 10 - Prob. 2PBCh. 10 - Prob. 3PBCh. 10 - Prob. 4PBCh. 10 - Divisional performance analysis and evaluation The...Ch. 10 - Prob. 6PBCh. 10 - Prob. 1MADCh. 10 - Prob. 2MADCh. 10 - Papa Johns International, Inc. (PZZA), operates...Ch. 10 - Panera Bread Company (PNRA) operates over 2,000...Ch. 10 - Prob. 5MADCh. 10 - Prob. 1TIFCh. 10 - Prob. 2TIFCh. 10 - Prob. 3TIFCh. 10 - The three divisions of Yummy Foods are Snack...Ch. 10 - Prob. 5TIFCh. 10 - Prob. 1CMACh. 10 - Prob. 2CMACh. 10 - Prob. 3CMACh. 10 - Morrisons Plastics Division, a profit center,...
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
- Weyerhaeuser developed a system that assigns service department expenses to user divisions on the basis of actual services consumed by the division. Here are a number of Weyerhaeuser's activities in its central Financial Services Department: Payroll Accounts payable Accounts receivable Database administration—report preparation For each activity, identify an activity base that could be used to charge user divisions for service.arrow_forwardIdentify an activity base that could be used to charge user divisions for services for each actitivity. Payroll Accounts Payable Accounts Receivable Database Administration-report preparationarrow_forwardCost Drivers for Support Department Allocations For each of the following support departments, select the cost driver listed that is most appropriate for allocating support department costs to responsible units. Your answer should include the number of the cost driver only. Cost drivers to choose from: Number of conference attendees Number of computers Number of employees trained Number of cell phone minutes used Number of purchase requisitions Number of sales invoices Number of payroll checks Number of travel claims Support Department Cost Driver a. Accounts Receivable b. Central Purchasing c. Computer Support d. Conferences e. Employee Travel f. Payroll Accounting g. Telecommunications h. Trainingarrow_forward
- Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Required A Complete this question by entering your answers in the tabs below. Department costs Personnel allocation Legal allocation Total costs Costs Department costs Legal allocation Personnel allocation Total costs Personnel Required B Required C Legal Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method. From Total Allocate the cost of the service departments to the operating divisions using the direct…arrow_forwardThe actions listed next are associated with either an activity-based operational control system or a traditional operational control system: a. Budgeted costs for the maintenance department are compared with the actual costs of the maintenance department. b. The maintenance department manager receives a bonus for beating budget. c. The costs of resources are traced to activities and then to products. d. The purchasing department is set up as a responsibility center. e. Activities are identified and listed. f. Activities are categorized as adding or not adding value to the organization. g. A standard for a products material usage cost is set and compared against the products actual materials usage cost. h. The cost of performing an activity is tracked over time. i. The distance between moves is identified as the cause of materials handling cost. j. A purchasing agent is rewarded for buying parts below the standard price set by the company. k. The cost of the materials handling activity is reduced dramatically by redesigning the plant layout. l. An investigation is undertaken to find out why the actual labor cost for the production of 1,000 units is greater than the labor standard allowed. m. The percentage of defective units is calculated and tracked over time. n. Engineering has been given the charge to find a way to reduce setup time by 75 percent. o. The manager of the receiving department lays off two receiving clerks so that the fourth-quarter budget can be met. Required: Classify the preceding actions as belonging to either an activity-based operational control system or a traditional control system. Explain why you classified each action as you did.arrow_forwardA cost driver is used to allocate support department expenses. Match each of the following cost drivers with the appropriate department. Clear All Number of work orders Number of employees Number of payroll checks Number of purchase requisitions Payroll Accounting Maintenance President's Office Purchasing Human Resourcesarrow_forward
- Activity Bases for Service Department Charges For each of the following service departments, select the activity base listed that is most appropriate for charging service expenses to responsible units. Your answer should include the number of the activity base only. Activity bases to choose from: Number of conference attendees Number of computers Number of employees trained Number of cell phone minutes used Number of purchase requisitions Number of sales invoices Number of payroll checks Number of travel claims Service Department Activity Base a. Accounts Receivable fill in the blank 1 b. Central Purchasing fill in the blank 2 c. Computer Support fill in the blank 3 d. Conferences fill in the blank 4 e. Employee Travel fill in the blank 5 f. Payroll Accounting fill in the blank 6 g. Telecommunications fill in the blank 7 h. Training fill in the blank 8arrow_forwarddetermine most important cost drivers for each department of a project-based cunstruction company: 1. Human Resource Management Department (for cost pools such as Recruiting, Acquisition, Formal Training, Informal Training, Development, etc) 2. Legal Department (for Employer contracts, legal, claims, etc) 3. Financing Department 4. Business Developement 5. Accounting and finance Department 6. Organizational Excellence Management Department (for risk, strategy, budget, performance planning and controlling) 7. HSE and Quality Department 8. CEO office 9. Deputy for Planning and Executive Coordination 10. Stock affairs, corporate affairs and corporate oversightarrow_forwardFor each office or business segment, indicate which type of Responsibility Center it is: a. A retail location, such as the Apple Store b. A manufacturing division that manages its own facilities and production equipment c. Call center for a warranty claims processing d. Consulting department of an accounting firm e. Quality control department for a golf ball manufacturer PreviousNextarrow_forward
- When you look at the organizational structure of ABC Inc., you notice that the Marketing department is divided into communications, event planning, marketing, and web content. You also see that the Accounting department has separate units for accounts payable and accounts receivable. ABC Inc. uses ________ departmentalization. Question 9 options: A) product B) geographic C) functional D) customer E) processarrow_forwardXerox Corporation has been an innovator in its responsibility-accounting system. In one initiative, management changed the responsibility-center orientation of its Logistics and Distribution Department from a cost center to a profit center. The department manages the inventories and provides other logistical services to the company s Business Systems Group. Formerly, the manager of the Logistics and Distribution Department was held accountable for adherence to an operating expense budget. Now the department "sells" its services to the company s other segments, and the department s manager is evaluated partially on the basis of the department s profit. Xerox Corporation s management feels that the change has been beneficial. The change has resulted in more innovative thinking in the department and has moved decision making down to lower levels in the company. Required: Comment on the new responsibility-center designation for the Logistics and Distribution Department.arrow_forwardSuccessful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. Listed below are four key features. Which is a key feature of the production module? (a) Inventory (b) Bill of material (c) Receive payment (d) Marketing Managementarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
What is Cost Allocation? Definition & Process; Author: FloQast;https://www.youtube.com/watch?v=hLhvvHvZ3JM;License: Standard Youtube License