Bonanza has two operating departments (Movies and Video Games) and one service department (Office). Its departmentalincome statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office departmentexpenses.Departmental Income StatementsVideoFor Year Ended December 31 MoviesGamesCombined$600,000420,000180,000$200,000154,00046,000$800,000574,000226,000SalesCost of goods soldGross profitExpensesSales salariesSupplies usedDepreciation-Equipment70,5005,0007,50050,0009,00049,50021,0001,0004,0004,50041,0007,3803,0009,0001,620RentUtilitiesShare of office department56,25018,75075,000expensesTotal expensesIncome (loss)162,630$ 17,37054,370$ (8,370)217,000$ 9,000Req1. Prepare a departmental contribution to overhead report (see Exhibit 22.12).2. Should the video games department be eliminated? Explain.

In this question, we have to find out the departmental contribution margin. Contribution means the…

Bonanza has two operating departments (Movies and Video Games) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses.

Bonanza has two operating departments (Movies and Video Games) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 7E: Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments,...

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Service department charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of 64,560, and the Purchasing Department had expenses of 40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: A. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. B. Using the cost driver information in (A), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. C. Why does the Residential Division have a larger support department allocation than the other two divisions, even though its sales are lower?
INCOME STATE MENT WITH DEPARTMENTAL OPERATING INCOME AND TOTAL OPERATING INCOME Alexa Cole owns a business called Alexas Bakery. She has divided her business into two departments: breads and pastries. The following information is provided for the fiscal year ended June 30, 20--: REQUIRED 1. Prepare an income statement showing departmental operating income and total operating income. 2. Calculate departmental operating expense and operating income percentages.
The sales, gross profit, and direct and indirect operating expenses of Departments A and B of Cardoba Inc. are as follows: Dept. ADept. BTotalSales$420,000$290,000$710,000Gross profit243,000197,000440,000Direct operating expenses205,000118,000323,000Indirect operating expenses160,000Required:Compute the departmental direct operating margin and direct operating margin percentage for each department.
The sales, gross profit, and direct and indirect operating expenses of Departments A and B of Cardoba Inc. are as follows: Dept. A Dept. B Total Sales $420,000 $290,000 $710,000 Gross profit 243,000 197,000 440,000 Direct operating expenses 205,000 118,000 323,000 Indirect operating expenses 160,000 Help compute the departmental direct operating margin and direct operating margin percentage for each department.
State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the year ended December 31 follows. Administration Communications Facilities Deposits Loans Direct costs $ 210,000 $ 320,000 $ 253,000 $ 7,590,000 $ 5,400,000 Employee hours 21,000 31,000 21,000 416,000 357,000 Number of employees 8 17 7 190 160 Square footage occupied 4,600 14,500 5,200 246,900 202,900 The costs of the service departments are allocated on the following bases: Administration, employee-hours; Communications, number of employees; and Facilities, square footage occupied. Required: a. Assume that the bank elects to distribute service department costs to production departments using the direct method. What amount of…
In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $64,560, and the Purchasing Department had expenses of $40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial Government Contract Sales $2,000,000 $3,250,000 $2,900,000 Number of employees: Weekly payroll (52 weeks a year) 410 210 160 Monthly Payroll 75 35 15 Number of purchase requisitions per year 7,400 3,000 2,000 Determine the total dollar amount of payroll checks and purchase requisitions processed per year by the company and each division. Using the activity base…
Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $459,200 Purchasing Department 96,900 Other corporate administrative expenses 545,000 Total corporate expense $1,101,100 The other corporate administrative expenses include officers’ salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department charges divisions for services, based on the number of purchase orders for each department. The usage of service by the two divisions is as follows: Tech Support Purchasing Consumer Division 380 computers 1,900 purchase orders Commercial Division 180 3,800 Total 560 computers 5,700 purchase orders The service department charges of…
Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $800,100 Purchasing Department 258,000 Other corporate administrative expenses 455,000 Total corporate expense $1,513,100 The other corporate administrative expenses include officers’ salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department charges divisions for services, based on the number of purchase orders for each department. The usage of service by the two divisions is as follows: Tech Support Purchasing Consumer Division 390 computers 6,000 purchase orders Commercial Division 240 11,200 Total 630 computers 17,200 purchase orders The service department charges of the…
Rocky Mountain Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: Rocky Mountain Airlines Inc.Divisional Income StatementsFor the Year Ended December 31, 20Y9 PassengerDivision CargoDivision Revenues $4,200,000 $4,200,000 Operating expenses (2,700,000) (3,500,000) Operating income before support department allocations $1,500,000 $700,000 Support department allocations: Training $(180,000) $(180,000) Flight scheduling (275,000) (275,000) Reservations (375,000) (375,000) Total support department allocations $(830,000) $(830,000) Operating income (loss) $670,000 $(130,000) The support department allocation rates for the support department costs were based on revenues. Because the revenues of the two divisions were the same, the support department allocations to each division were…
[The following information applies to the questions displayed below.] Suresh Company reports the following segment (department) income results for the year. Department M Department N Department O Department P Department T Total Sales $ 67,000 $ 37,000 $ 60,000 $ 46,000 $ 32,000 $ 242,000 Expenses Avoidable 11,800 38,800 23,600 16,000 41,400 131,600 Unavoidable 53,400 15,000 4,600 31,800 12,600 117,400 Total expenses 65,200 53,800 28,200 47,800 54,000 249,000 Income (loss) $ 1,800 $ (16,800) $ 31,800 $ (1,800) $ (22,000) $ (7,000) Compute the total increase in income if the departments with sales less than avoidable costs, as identified in part a, are eliminated.
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In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $51,792, and the Purchasing Department had expenses of $22,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $ 460,000 $ 609,000 $ 1,399,000 Number of employees: Weekly payroll (52 weeks per year) 170 65 70 Monthly payroll 36 47 34 Number of purchase requisitions per year 2,100 1,500 1,400 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Residential Commercial Government Contract…