Mr. Bulls is the manager of triangle offense, a profit center of the windy city corporation. His unit reported the following for the period just ended: Contribution Margin P5,000,000 Period Expenses Managers salary 1,000,000 Depreciation Expense 1,600,000 Allocated administrative costs 755,000 3,355,000 Profit center income 1,645,000 Mr. Bulls would most likely control what amount?

Mr. Bulls is the manager of triangle offense, a profit center of the windy city corporation. His unit reported the following for the period just ended: Contribution Margin P5,000,000 Period Expenses Managers salary 1,000,000 Depreciation Expense 1,600,000 Allocated administrative costs 755,000 3,355,000 Profit center income 1,645,000 Mr. Bulls would most likely control what amount?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 6EB: Sanchez & Vukmin, LLP, is a full-service accounting firm located near Chicago, Illinois. Last year,...

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Each of the following scenarios requires the use of accounting information to carry out one or more of the following managerial activities: (1) planning, (2) control and evaluation, (3) continuous improvement, or (4) decision making. a. MANAGER: At the last board meeting, we established an objective of earning an after-tax profit equal to 20 percent of sales. I need to know the revenue that we need to earn in order to meet this objective, given that we have 250,000 to spend on the promotional campaign. Once I have estimated sales in units, we then need to outline a promotional campaign that conforms to our budget and that will take us where we want to be. However, to compute the targeted sales revenue, I need to know the unit sales price, the unit variable cost, and the associated fixed production and support costs. I also need to know the tax rate. b. MANAGER: We have problems with our procurement process. Our accounts payable department is spending 80 percent of its time resolving discrepancies between the purchase order, receiving order, and suppliers invoice. Incorrect part numbers on the purchase orders, incorrect quantities ordered, and wrong parts sent (or the incorrect quantity) are just a few examples of sources of discrepancies. A complete redesign of the process has been suggested, which will allow us to eliminate virtually all of the errors and, at the same time, significantly reduce the number of clerks needed in purchasing, receiving, and accounts payable. This redesign promises to significantly reduce costs, decrease lead time, and increase customer satisfaction. c. MANAGER: This overhead cost report indicates that we have spent significantly more on inspection, purchasing, and production than was budgeted. An investigation has revealed that the source of the problem is faulty components from suppliers. A supplier evaluation has revealed that by selecting five suppliers with the best quality records (out of 15 currently used), the number of defective components will be dramatically reduced, thus producing significant overhead savings by reducing the demand for inspections, reordering, and rework. d. MANAGER: A large local firm has approached me and has offered to sell us one of the components used in our small enginesa component that we are currently producing internally. I need to know costs that we would avoid if this component is purchased so that I can assess the economic merits of this offer. e. MANAGER: Currently, our deluxe lawn mower is losing money. We need to increase profits. I would like to know how much our profits would be if we reduce our variable costs by 50 per mower while maintaining our current sales volume. Also, marketing claims that if we increase advertising expenditures by 1,000,000 and cut prices by 15 percent, we can increase the number of mowers sold by 25 percent. I would like to know which approach offers the most profit, or if a combination of the approaches may be best. f. MANAGER: We are implementing a major quality improvement program. We will be increasing the investment in prevention and detection activities with the expectation of driving down both internal and external failure costs. I expect to see trend reports for all categories of quality costs. I want to see if improving quality really does reduce costs and improve profitability. g. MANAGER: Our engineering design department has proposed a new design for our product. The new design promises to reduce post-purchase costs and, as a consequence, increase market share. I need to know the cost of producing this new design because it uses some new components and requires some different manufacturing processes. I would then like to have a projected income statement based on the new market share and new production costs. The planned selling price will be the same, or maybe even 10 percent lower. Projections based on the two price scenarios would be needed. h. MANAGER: My engineers have said that by redesigning our two main production processes, we can reduce move time by 90 percent and wait time by 85 percent. This would decrease cycle time and virtually eliminate the need to carry finished goods inventories. On-time deliveries would also increase dramatically. This would produce cost savings of nearly 20,000,000 per year. Market share and revenues would also increase. Required: 1. Describe each of the four managerial responsibilities. 2. Identify the managerial activity or activities applicable for each scenario, and indicate the role of accounting information in the activity.
Aira is the manager of babe, a profit center of the el corporation. Her unit reported the following for the period just ended: Contribution Margin P5,000,000 Period Expenses Managers salary 1,000,000 Depreciation Expense 1,600,000 Allocated administrative costs 755,000 3,355,000 Profit center income 1,645,000 Aira would most likely control what amount?A. 5,000,000 B. 1,000,000 C. 1,355,000 d. 1,645,000
For an absorption costing income statement, which of the following would be considered an administrative expense? Salary of CFO: 175,000 Commissions: 200,000 Advertising: 750,000 Research and development: 120,000 Depreciation on corporate office: 60,000
The following is a summarized income statement for McClaron Manor Co.'s profit center 12608 for April: Contribution Margin $ 176,000 Period Expenses $ 12,000 Manager' s Salary $ 2,100 Corporate Expense Allocation $ 8,100 $ (22,200 ) Net Income $ 153,800 Which of the following amounts is most likely subject to the control of the profit center's manager? (CPA, adapted) Multiple Choice Contribution Margin of $176,000 and Period Expenses of $14,100. Contribution Margin of $176,000. Contribution Margin of $176,000 and Period Expenses of $22,200. Contribution Margin of $176,000 and Period Expenses of $12,000.
Mr. Sy is the general manager of the XXX Division, and his performance is measured using the residual income method. Mr. Sy is reviewing the following forecasts to his division for the next year:Category AmountsWorking Capital P 1,800,000Revenue 30,000,000Plant and Equipment 17,200,000If the imputed interest charge is 15% and Mr. Sy wants to achieve a residual income of P2,000,000 what will costs (total expenses) have to be in order to achieve the targeted residual income?
The following information relates to next year's projected operating results of the One Division of Your Corporation: Contribution margin $1,800,000 Fixed expenses $2,100,000 Net operating loss ($300,000) If the X Division is eliminated, $1,900,000 of the above fixed expenses could be avoided. If the Division is eliminated, what is the change in net income?
The following information relates to next year's projected operating results of the One Division of Your Corporation: Contribution margin $1,800,000 Fixed expenses $2,100,000 Net operating loss ($300,000) If the X Division is eliminated, $1,900,000 of the above fixed expenses could be avoided. If the Division is eliminated, what is the change in net income? Enter your answer without dollar signs. If the impact is a loss use a negative sign in front of the number.
Gwen is the managerial accountant in charge of Company A, which sellswater bottles. She previously determined that the fixed costs of Company A consist ofproperty taxes, a lease, and executive salaries, which add up to P500,000. Thevariable cost associated with producing one water bottle is P80 per unit. The waterbottle is sold at a premium price of P500. a. Formulate the total cost function.b. Formulate the revenue function.c. Formulate the profit function.d. Determine the breakeven quantity and the breakeven sales.e. Use the graphical method to determine the breakeven point.
GGX is the general manager of the Jung Division, and his performance is measured using the residual income method. GGX is reviewing the following forecasted information for the division for next year. Category Amount (thousands) Working capital P 1,800 Revenue 30,000 Plant and equipment 17,200 To establish a standard of performance for the division’s manager using the residual income approach, four scenarios are being considered. Scenario 1 assumes an imputed interest charge of 12% and a target residual income of P1,500,000. Scenario 2 assumes an imputed interest charge of 15% and a target residual income of P2,000,000. Scenario 3 assumes an imputed interest charge of 18% and a target residual income of P1,250,000. Scenario 4 assumes an imputed interest charge of 10% and a target residual income of P2,500,000. What is the residual income for scenario 2?
Samsun company operates with two divisions, sam and sun. The results of the operations last year showed the company earning a net operating income of P468,000 while allocating P1,040,000 ccommon fixed expenses. The contribution margin of Sam was P780,000 while contribution margin ratio for sun ws 40%. Sun was able to generate sales of P3,250,000, and its segment margin was P832,000. The segment margin for sam was: A. P676,000 B. 1,508,000 C. P208,000 D. P832,000
Spartans Inc. has the following information for its two divisions: North and South North South Sales $6,000,000 $6,000,000 Expenses $3,800,000 $3,800,000 Oper. Income $2,200,000 $2,200,000 Taxes $660,000 $770,000 Taxable Inc. $1,540,000 $1,430,000 Invested Assets $13,000,000 $15,000,000 Spartans Inc. has a 10% hurdle rate. Calculate the following for each division: Return on Investment (ROI) North Division ________________ South…
Adams Corporation has three divisions, each operating as a responsibility center. To provide an incentive for divisional executive officers, the company gives divisional management a bonus equal to 20 percent of the excess of actual net income over budgeted net income. The following is Atlantic Division’s current year’s performance. Current Year Sales revenue $ 4,080,000 Cost of goods sold 2,410,000 Gross profit 1,670,000 Selling & administrative expenses 890,000 Net income $ 780,000 The president has just received next year’s budget proposal from the vice president in charge of Atlantic Division. The proposal budgets a 4 percent increase in sales revenue with an extensive explanation about stiff market competition. The president is puzzled. Atlantic has enjoyed revenue growth of around 9 percent for each of the past five years. The president had consistently approved the division’s budget proposals based on 4 percent…

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bartleby, a Learneo, Inc. business

Contribution Margin			P5,000,000
Period Expenses
	Managers salary	1,000,000
	Depreciation Expense	1,600,000
	Allocated administrative costs	755,000	3,355,000
Profit center income			1,645,000