Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 15, Problem 1E
Exercise 9-6A Evaluating a profit center
Helen Kaito, the president of Gladstone Toys Corporation, is trying to determine this year’s pay raises for the store managers. Gladstone Toys has seven stores in the southwestern United States. Corporate headquarters purchases all toys from different manufacturers globally and distributes them to individual stores. Additionally, headquarters makes decisions regarding location and size of stores. These practices allow Gladstone Toys to receive volume discounts from vendors and to implement coherent marketing strategies. Within a set of general guidelines, store managers have the flexibility to adjust product prices and hire local employees. Ms. Kaito is considering three possible performance measures for evaluating the individual stores: cost of goods sold, return on sales (net income divided by sales), and
Required
- a. Using the concept of controllability, advise Ms. Kaito about the best performance measure.
- b. Explain how a balanced scorecard can be used to help Ms. Kaito.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Knowledge Check 01
Match the term and the definition.
1. Adventure Holiday sells thousands of tour packages each month through its various
branches. A branch manager's salary would be a(n).
of selling a tour package.
is a cost that is incurred to support a number of cost objects but cannot be
2 A
traced to them individually
3. Adventure Holiday sells thousands of tour packages each month through its various
branches A branch manager's salary would be a(n)
of the branch
Current Attempt in Progress
Vaughn is a manufacturer that specializes in three types of toy instruments: xylophones, electronic keyboards, and drum sets.
Grandparents across the globe flock to stores so they can buy their kids' kids these especially noisy toys. Company managers are
equally excited about their products and await the profit report for this year's performance. The following partial income statement
was released to all managers last week.
Sales
Cost of goods sold
Gross margin
Operating expenses
Operating income
(a)
Use Excel to complete the following.
Xylophone
$505,000
Operating
income
217,000
Your answer is correct.
Profit
margin
percentage
288,000
3
Keyboard
$896,000
444,000
Xylophone
452,000
112527
Drums
12
$602,000
339,000
263,000
The company has not previously allocated its operating expenses to the three product lines but wants to do so now. Managers
believe operating expenses are incurred in a proportion similar to COGS for each product line. Allocate the operating…
Problem 10-59 (Algo) Customer Profitability (LO 10-4)
Carmel Company has a frequent buyer program for its customers, where the customers can attain an “elite” level based on the number of orders and the total revenue of the orders. There are two elite levels: Platinum and Titanium. The benefits of elite membership include discounts and access to special customer service representatives who can resolve problems. The company has one full-time customer representative per 200 Titanium customers and one full-time customer representative per 2,000 Platinum customers. Customer representatives receive salaries plus bonuses of 1 percent of customer gross margin. Carmel spends 90 percent of its promotion costs on Titanium customers to encourage their loyalty.
Customer Costs
Total
Titanium
Platinum
Number of customers
34,000
8,000
26,000
Average customer representative salary
$
71,000
$
71,000
Promotion costs
$
3,150,000
Average gross margin per…
Chapter 15 Solutions
Survey Of Accounting
Ch. 15 - 1. Pam Kelly says she has no faith in budgets. Her...Ch. 15 - 7. What is a responsibility center?Ch. 15 - Prob. 3QCh. 15 - Prob. 4QCh. 15 - Prob. 5QCh. 15 - 3. When are sales and cost variances favorable and...Ch. 15 - 4. Joan Mason, the marketing manager for a large...Ch. 15 - Prob. 8QCh. 15 - Prob. 9QCh. 15 - Prob. 10Q
Ch. 15 - Prob. 11QCh. 15 - 9. Minnie Divers, the manager of the marketing...Ch. 15 - 6. How do responsibility reports promote the...Ch. 15 - Prob. 14QCh. 15 - Prob. 15QCh. 15 - Prob. 16QCh. 15 - 12. How can a residual income approach to...Ch. 15 - Prob. 18QCh. 15 - Exercise 9-6A Evaluating a profit center Helen...Ch. 15 - Prob. 2ECh. 15 - Prob. 3ECh. 15 - Prob. 4ECh. 15 - Exercise 8-3A Determining amount and type...Ch. 15 - Prob. 6ECh. 15 - Exercise 8-4A Determining sales and variable cost...Ch. 15 - Exercise 8-5A Determining flexible budget...Ch. 15 - Exercise 8-9A Responsibility for the fixed cost...Ch. 15 - Prob. 10ECh. 15 - Exercise 8-7A Evaluating a decision to increase...Ch. 15 - Prob. 12ECh. 15 - Prob. 13ECh. 15 - Exercise 9-9A Residual income Climax Corporation...Ch. 15 - Residual income Gletchen Cough Drops operates two...Ch. 15 - Prob. 16ECh. 15 - Prob. 17ECh. 15 - Prob. 18PCh. 15 - Prob. 19PCh. 15 - Prob. 20PCh. 15 - Prob. 21PCh. 15 - Problem 9-20A Return on investment Sorrento...Ch. 15 - Problem 9-21A Comparing return on investment and...Ch. 15 - Comparing return on investment and residual income...Ch. 15 - ATC 8-1 Business Applications Case Static versus...Ch. 15 - Prob. 2ATCCh. 15 - Prob. 3ATCCh. 15 - ATC 9-1 Business Applications Case Analyzing...Ch. 15 - Prob. 5ATC
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
- Sales territory and salesperson profitability analysis Havasu Off-Road Inc. manufactures and sells a variety of commercial vehicles in the Northeast and Southwest regions. There are two salespersons assigned to each territory. Higher commission rates go to the most experienced salespersons. The following sales statistics are available for each salesperson: a. 1. Prepare a contribution margin by salesperson report. Compute the contribution margin ratio for each salesperson. 2. Interpret the report. b. 1. Prepare a contribution margin by territory report. Compute the contribution margin for each territory as a percent, rounded to one decimal place. 2. Interpret the report.arrow_forwardKanye Achebe just became the operations manager of Weston Transportation. Weston transports large crates for online companies and transports containers overseas. Kanye would like to evaluate each divisional manager on a basis similar to segmental reporting required by generally accepted accounting principles (GAAP) financial statements contained in annual reports. These data include a presentation of net sales, operating profit and loss before and after taxes, total identifiable assets, and depreciation for segment reported. Kanye thinks that evaluating business division managers by the same criteria as the total company is appropriate. A. Explain why you think the chief financial officer (CFO) disagrees and tells Kanye that publicly reporting information might demotivate managers. B. For better evaluation of the managers, what type of information should Kanye propose that the CFO might accept?arrow_forwardThe A-to-Z Office Supply Company Christine Yamaguchi is the manager of the A-to-Z Office Supply Company in Charlotte. The company attempts to gain an advantage over its competitors by providing quality customer service, which includes prompt delivery of orders by truck or van and always being able to meet customer demand from its stock. To achieve this degree of customer service, A-to-Z must stock a large volume of items on a daily basis at a central warehouse and at three retail stores in the city and suburbs. Christine maintains these inventory levels by borrowing cash on a daily basis from the First Piedmont Bank. She estimates that for the coming fiscal year, the company’s demand for cash to pay for inventory will be $17,000 per day for 305 working days. Any money she borrows during the year must be repaid with interest by the end of the year. The annual interest rate currently charged by the bank is 9%. Any time Christine takes out a loan to purchase inventory, the bank charges…arrow_forward
- Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Additional data concerning the usage of the activities by the various customers are also provided: Required: (Note: Round answers to two decimal places.) 1. Calculate a cost per account per year by dividing the total cost of processing and maintaining checking accounts by the total number of accounts. What is the average fee per month that the bank should charge to cover the costs incurred because of checking accounts? 2. Calculate a cost per account by customer category by using activity rates. 3. Currently, the bank offers free checking to all of its customers. The interest revenues average 90 per account; however, the interest revenues earned per account by category are 80, 100, and 165 for the low-, medium-, and high-balance accounts, respectively. Calculate the average profit per account (average revenue minus average cost from Requirement 1). Then calculate the profit per account by using the revenue per customer type and the unit cost per customer type calculated in Requirement 2. 4. CONCEPTUAL CONNECTION After the analysis in Requirement 3, a vice president recommended eliminating the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than made up for the loss through cross-sales. He presented a survey that showed that 50% of the customers would switch banks if a checking fee were imposed. Explain how you could verify the presidents argument by using ABC.arrow_forwardMASTERY PROBLEM Bobs Acme Supermarket has been in operation for many years, offering high-quality groceries, produce, and meat at reasonable prices. Accounting records are maintained on a departmental basis with assignment of direct expenses and allocation of indirect expenses through the use of various procedures. Selected operating information for the year ended December 31, 20--, is as follows: REQUIRED 1. (a) Prepare an income statement showing departmental operating income. (b) Compute the gross profit percentage and operating income percentage for each department (round to the nearest tenth of a percent). 2. (a) Prepare an income statement showing departmental and total direct operating margins. (b) Compute the departmental direct operating margin percentage for each department (round to the nearest tenth of a percent). 3. Should Bob be concerned about the profitability of the three departments? Should any of the departments be discontinued?arrow_forward(Appendix 11A) Balanced Scorecard The following list gives a number of measures associated with the Balanced Scorecard: a. Number of new customers b. Percentage of customer complaints resolved with one contact c. Unit product cost d. Cost per distribution channel e. Suggestions per employee f. Warranty repair costs g. Consumer satisfaction (from surveys) h. Cycle time for solving a customer problem i. Strategic job coverage ratio j. On-time delivery percentage k. Percentage of revenues from new products Required: 1. Classify each performance measure as belonging to one of the following perspectives: financial, customer, internal business process, or learning and growth. 2. Suggest an additional measure for each of the four perspectives.arrow_forward
- Higado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost with respect to the stores? Multiple Choice cost of goods sold at each store store manager salaries store building depreciation expense the cost of corporate advertising aired during the Super Bowlarrow_forwardRefer to Exercise 8.29. Suppose Gene determines that next year's Sales Division activities include the following: Research researching current and future conditions in the industry Shipping arranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors Jobbers coordinating the efforts of the independent jobbers who sell the mattresses Basic ads-placing print and television ads for the Sleepeze and Plushette lines Ultima ads choosing and working with the advertising agency on the Ultima account Office management-operating the Sales Division office The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table: Research Administrative Gene Assistant Assistant Research 75% Shipping Jobbers 30% 20% 15 10 20 Basic ads 15 40 Ultima ads 30 5 Office management 25 15arrow_forwardQuestion The Mandalorian Company has two divisions, Production and Marketing. Production manufactures Beskar Head Armour for Knights of the Old Republic, which it sells to both the Marketing Division and to other retailers (the latter under a different brand name). Marketing operates several small armour stores in shopping centers throughout Corruscant. Marketing sells both Beskar Head Armour and other brands. Relevant facts for Production are as follows: Sales Price to Outsiders.............................................................$28.50 per Pcs Variable Cost to Produce...........................................................$18.00 per Pcs Fixed Costs ................................................................................$100,000 per Month The following data pertain to the sale of Mandalorian Company Beskar Head Armour by Marketing: Marketing is operating far below its capacity. Sales…arrow_forward
- CVP Analysis; Strategy Bubba’s Western Wear is a western hat retailer in Lubbock, Texas.Although Bubba’s carries numerous styles of western hats, each hat has approximately the same priceand purchase cost, as shown in the following table. Sales personnel receive a commission to encourage them to be more aggressive in their sales efforts. Currently, the Lubbock economy is really humming, and sales growth at Bubba’s has been great. The business is very competitive, however, andBubba, the owner, has relied on his knowledgeable and courteous staff to attract and retain customerswho otherwise might go to other western wear stores. Because of the rapid growth in sales, Bubbais also finding the management of certain aspects of the business more difficult, such as restockinginventory and hiring and training new salespeople.Sales price $ 80.00Per unit variable expensesPurchase cost 43.50Sales commissions 11.50Total per unit variable costs $ 55.00Total annual fixed expensesAdvertising $…arrow_forwardFINANCIAL ACCOUNTING vs. MANAGERIAL ACCOUNTING Suppose you have been hired by an ice cream company as a market analyst. Your first assignment is to evaluate the sales of various standard and specialty ice creams within the Western region where the company operates. You also need to determine the best-selling flavors of ice cream in other regions of the Canada as well as the selling patterns of the flavors. Do some flavors sell better than others at different times of the year, or are some top sellers sold as limited-edition flavors? Remember that one of the strategic goals of the company is to increase market share, and the first step in meeting this goal is to sell their product in 10 percent more stores within their current market, so your research will help upper-level management carry out the company's goals. 1. Where would you gather the information? Where would you find this information? 2. What type of information would you need? 3. How would the company determine the impact of…arrow_forwardCost-hierarchy income statement and allocation of corporate costs to customers. The Insurance Company insures homeowners in three regions of the United States: Eastern, Midwest, and South. In the past year, several hurricanes hit the Southern region of the United States, requiring payments to insured homeowners. Management of the company wishes to analyze the profitability of the three key regions and has gathered the following information:arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Elements of cost | Direct and Indirect: Material, Labor, & Expenses; Author: Educationleaves;https://www.youtube.com/watch?v=UFBaj6AHjHQ;License: Standard youtube license