College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 25, Problem 6SEB
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?
The Bramble Company makes wheels and wings for ground transport vehicles and drones. In addition
to the key manufacturing departments, Bramble needs two key support services, provided by its
Maintenance and IT departments.
The Maintenance costs are allocated to other departments based on the square footage of space each
department occupies. The IT department allocates its costs to other departments based on the amount
of time the IT employees spend assisting the other departments. The cost information of all four
departments, along with their usage information for both allocation bases, is as follows.
Initial cost
Square feet occupied
IT labor hours used
Support Departments
Maintenance
IT
$120.000 $74.000
1,100
1.800
1,100
Operating Departments
Wheels
$396,000
2,160
2,280
Wings
$700,000
5,040 h
1.720
Totals
$1,290,000
10,100
5,100
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_forwardDivisional 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 Allocationsarrow_forwardThe difference between a department’s gross profit and its operating expenses is called(a) departmental gross profit.(b) departmental direct operating margin.(c) departmental operating income.(d) net income.arrow_forward
- INCOME 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_forwardCorrections to service department charges Panda Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared The service department charge rate for the service department costs was based on revenues. The following additional information is available a.Does the operating income for the two divisions accurately measure performance? b.Using service charge rates for service department charges, correct the divisional income statements.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
- The 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_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_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_forward
- Compute the ROI ratio (operating income to total assets) of each division using historical-cost measures. Comment on the results.arrow_forwardBluStar 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_forward
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