College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 25, Problem 6SEA
To determine
Ascertain the direct operating margin and direct operating margin percentage for both the departments.
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Direct expenses are assigned to departments based on
a.estimated expenses.
b.actual expenses.
c.the percentage of gross sales represented by each department.
d.the percentage of total net sales represented by each department.
How much is the net operating income contributed to the company by Department A and B?
Using the data above, what is the segment margin of Department A and B?
Divisional Income Statements
1. Admin Expenses, Operating Income before Support Department Allocations, Sales, Suuport Department Allocations.
2. Admin Expenses, Cost of Goods Sold, Gross Profit, Support Department Allocations
3. Gross Profit, Operating Income, Sales, Support Department Allocations
4. Admin Expenses, Cost of Goods Sold, Gross Profit, Support Department Allocations
5. Cost of Goods Sold, Operating Income before Support Department Allocations, Sales, Support Department Allocations
6. Gross Profit, Loss from Operations, Sales, Support Department Allocations
7. Gross Profit, Loss from Operations, Operating Income, Operating Income before Support Department Allocations
Chapter 25 Solutions
College Accounting, Chapters 1-27
Ch. 25 - A department that incurs costs and generates...Ch. 25 - Departmental gross profit is the difference...Ch. 25 - Prob. 3TFCh. 25 - Direct expenses are operating expenses incurred...Ch. 25 - Departmental direct operating margin is the...Ch. 25 - A department that incurs costs but does not...Ch. 25 - The difference between a departments net sales and...Ch. 25 - Prob. 3MCCh. 25 - The difference between a departments gross profit...Ch. 25 - The difference between a departments gross profit...
Ch. 25 - Prob. 1CECh. 25 - Prob. 2CECh. 25 - Prob. 3CECh. 25 - Prob. 1RQCh. 25 - Prob. 2RQCh. 25 - Prob. 3RQCh. 25 - Prob. 4RQCh. 25 - Prob. 5RQCh. 25 - Prob. 6RQCh. 25 - Prob. 7RQCh. 25 - Prob. 8RQCh. 25 - Distinguish between departmental gross profit,...Ch. 25 - Prob. 10RQCh. 25 - GROSS PROFIT SECTION OF DE PART MENT AL INCO ME ST...Ch. 25 - ALLOCATING OPERATING EXPENSESQUARE FEET Weaverling...Ch. 25 - ALLOCATING OPERATING EXPENSERELATIVE NET SALES...Ch. 25 - ALLOCATING OPERATING EXPENSEMILES DRIVEN Mercado...Ch. 25 - COMPUTING OPERATING INCOME The sales, cost of...Ch. 25 - Prob. 6SEACh. 25 - INCOME STATEMENT WITH DEPART MENTAL GROSS PROFIT...Ch. 25 - INCOME STATE MENT WITH DEPARTMENTAL OPERATING...Ch. 25 - INCOME STATEMENT WITH DEPART MENTAL DIRECT...Ch. 25 - Prob. 10SPACh. 25 - GROSS PROFIT SECTION OF DEPART MENTAL INCOME...Ch. 25 - Prob. 2SEBCh. 25 - ALLOCATING OPERATING EXPENSERELATIVE NET SALES...Ch. 25 - ALLOCATING OPERATING EXPENSEMILES DRIVEN Herbert...Ch. 25 - Prob. 5SEBCh. 25 - Prob. 6SEBCh. 25 - INCOME STATEMENT WITH DEPART MENTAL GROSS PROFIT...Ch. 25 - Prob. 8SPBCh. 25 - Prob. 9SPBCh. 25 - Prob. 10SPBCh. 25 - Prob. 1MYWCh. 25 - Prob. 1ECCh. 25 - MASTERY PROBLEM Bobs Acme Supermarket has been in...Ch. 25 - CHALLENGE PROBLEM This problem challenges you to...
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- COMPUTING OPERATING INCOME The sales, cost of goods sold, and total operating expenses of departments A and B of Ash Company are as follows: Compute the departmental operating income for each department.arrow_forwardDepartmental direct operating margin is the difference between a departments gross profit and its direct operating expenses.arrow_forwardUse the following information to compute each department's contribution to overhead. Which department contributes the largest amount toward total overhead? Sales Cost of goods sold Gross profit Total direct expenses Department A $ 54,000 34,020 19,980 4,980 Department B $ 201,000 104,520 96,480 37,480 Department C $ 81,000 42,930 38,070 8,926 Complete this question by entering your answers in the tabs below. Contribution to Departmental Overhead Overhead Compute each department's contribution to overhead. Department A Department B Department C Contribution to overhead Use the following information to compute each department's contribution to overhead. Which department contributes the largest amount toward total overhead? Department A $ 54,000 34,020 Department B $ 201,000 104,520 96,480 37,480 Department C $ 81,000 Sales Cost of goods sold Gross profit Total direct expenses 19,980 4,980 42,930 38,070 8,926 Complete this question by entering your answers in the tabs below. Contribution…arrow_forward
- Fill in the blanks in the schedule below for two separate investment centers A and B. Investment Center: Sales Income Average assets Profit margin Investment turnover Return on investment Investment Center A B Investment Turnover: Investment Center A B Return on investment: Investment Center A Use the information in the table above to compute each department's contribution to overhead (both in dollars and as a percent): (Round your final answers to 2 decimal places.) Profit Margin: B Numerator: Numerator: A Numerator: $? $ 584,600 $1,580,000 10% 7 28 B $ 12,200,000 Denominator: Denominator: $? $7 Denominator: 7% 1.3. 13% Profit Margin =Profit margin 10.00 % = Investment Turnover = Investment turnover 1.30 Return on investment = Return on investment. % 13.00 %arrow_forwardThe difference between a department’s net sales and cost of goods sold is called (a) departmental gross profit. (b) departmental direct operating income. (c) departmental operating income. (d) net income.arrow_forwardThe systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed a. cost-volume-profit analysis b. contribution margin analysis c. budgetary analysis d. gross profit analysis  In a profit center, the manager has responsibility and authority for making decisions that affect a. assets b. investments c. long-term liabilities d. costsarrow_forward
- BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting Domestic International Employees Transactions 22 45 33 36,000 $361,000 19,000 $945,000 76,000 $3,670,000 Department direct costs $149,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departments using the reciprocal method. Complete this question by entering your answers in the tabs below. Required A Required B Required C Allocate the cost of the service departments to the operating departments…arrow_forward20. Select which of the following requires a separate measurement of cost. a.Number b.Activity c.Area d.Volume  21. Select the objective of cost accounting which helps the management in doing the business efficiently. a.Guide to business policy b.Cost control and reduction c.Determination of selling price d.Ascertainment of timearrow_forwardTennair Corporation manufactures cooling system components. The company has gathered the following information about two of its customers: Evans Equipment and Rogers Refrigeration. Evans Equipment Sales revenue Rogers Refrigeration $ 160,000 61,000 Cost of goods sold General selling costs $ 229,000 102,000 37,000 23,800 28,500 General administrative costs 17,850 Cost-driver data used by the firm and traceable to Evans and Rogers are: Customer Activity Sales activity Order taking Special handling Special shipping Customer Activity Sales activity Order taking Special handling Special shipping Cost Driver Sales visits Sales orders Units handled Shipments Evans Equipment 12 visits 31 orders 460 units. 33 shipments Pool Rate $ 970 278 44 460 Rogers Refrigeration 9 visits 36 orders 410 units 44 shipments Required: A. Perform a customer profitability analysis for Tennair. Compute the gross margin and operating income on transactions related to Evans Equipment and Rogers Refrigeration.arrow_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_forwardWhich of the following bases is the most appropriate for the appointment of rent and rates expenses? Relative floor area of departments Number of employees in the department Technical estimation Horsepower rating ratioarrow_forwardINCOME STATEMENT WITH DEPART MENTAL DIRECT OPERATING MARGIN AND TOTAL OPERATING INCOME Durwood Thomas operates the business Thomas Security that sells security equipment for commercial property and residential homes. The following information is provided for the year ended December 31, 20--: REQUIRED 1. Prepare an income statement showing departmental direct operating margin and total operating income. 2. Calculate departmental direct operating margin percentages.arrow_forward
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