Question 1

Supporters of the contribution margin approach believe that:

Accepted Answer

A) indirect expenses should be departmentalized. 
B) indirect expenses should not be used for evaluating departmental performance. 
C) indirect expenses are proportionally charged to each department. 
D) direct expenses should not be used in evaluating departmental performance. 
A) indirect expenses should be departmentalized. 
B) indirect expenses should not be used for evaluating departmental performance. 
C) indirect expenses are proportionally charged to each department. 
D) direct expenses should not be used in evaluating departmental performance.

Question 2

If delivery expense is not traceable to a department,it would be considered a(n):

Accepted Answer

A) direct expense. 
B) indirect expense. 
C) profit center issue. 
D) cost center issue. 
A) direct expense. 
B) indirect expense. 
C) profit center issue. 
D) cost center issue.

Question 3

Calculate the costume jewelry department net income given the following: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 1,300 \
\hline \text { Direct operating expenses } & 300 \
\hline \text { Indirect operating expenses } & 250 \
\hline \text { Cost of goods sold } & 1,000 \
\hline
\end{array}$$

Accepted Answer

A) $1,300 
B) $1,000 
C) $300 
D) ($250) 
A) $1,300 
B) $1,000 
C) $300 
D) ($250)

Question 4

When a department showing a loss is eliminated,other departments will always achieve a greater contribution margin.

Accepted Answer

A) True 
 B)False

Question 5

When a company tracks gross profit by department,the sales journal will:

Accepted Answer

A) not differ from a company that does not track gross profit by department. 
B) have a separate column for accounts receivable for each department. 
C) have a separate column for sales for each department. 
D) have a column for purchases for each department. 
A) not differ from a company that does not track gross profit by department. 
B) have a separate column for accounts receivable for each department. 
C) have a separate column for sales for each department. 
D) have a column for purchases for each department.

Question 6

Indirect expenses are the same across departments and industries.

Accepted Answer

A) True 
 B)False

Question 7

What is the total gross profit of the company if there are three departments (A, B, and C) and the net sales are $200,000, $164,000, and $286,000, respectively, and cost of goods sold is $86,000, $92,000, and $82,000, respectively
A)$390,000
B)$650,000
C)$400,000
D)$260,000

Accepted Answer

To calculate the total gross profit of t

Question 8

Which of the following indirect expenses would most likely be allocated on the basis of gross sales?

Accepted Answer

A) Rent expense 
B) Utilities expense 
C) Miscellaneous expense 
D) None of the above 
A) Rent expense 
B) Utilities expense 
C) Miscellaneous expense 
D) None of the above

Question 9

Advertising expense totaled $40,000.If indirect advertising costs are allocated based on gross sales per department,what amount would be allocated to the Jewelry department if $10,000 of advertising is indirect? Gross Sales: Jewelry,$60,000; Glassware,$50,000; Watches,$40,000.

Accepted Answer

A) $16,000 
B) $4,000 
C) $20,000 
D) $3,333 
A) $16,000 
B) $4,000 
C) $20,000 
D) $3,333

Question 10

Given the following,calculate contribution margin and net income:
$ \begin{array}{lrrr} & && \text { Indirect } \ \text { Net Sales } & \text { DVD } & C D & \text { Expense } \ \text { Cost of Goods Sold } & \$ 7,500 & \$ 3,900 & \ & 4,100 & 1,800 &\\text {Operating Expenses (Indirect)}&&&\$ 2,600  
 \end{array} $

Accepted Answer

\[\begin{array} { l l l l } 
& \text { D

Question 11

Which of the following statements is incorrect?

Accepted Answer

A) Building expense is an indirect expense. 
B) Indirect expenses cannot be assigned to different departments based on an allocation such as square feet. 
C) If an expense is traceable to a particular department,it is a direct expense. 
D) Advertising expense can be both a direct and an indirect expense. 
A) Building expense is an indirect expense. 
B) Indirect expenses cannot be assigned to different departments based on an allocation such as square feet. 
C) If an expense is traceable to a particular department,it is a direct expense. 
D) Advertising expense can be both a direct and an indirect expense.

Question 12

If the music department in a department store is 8,000 square feet and the total square feet is 40,000,how much of the total building cost of $40,000 will be allocated to music?

Accepted Answer

A) $8,000 
B) $1,000 
C) $32,000 
D) $10,000 
A) $8,000 
B) $1,000 
C) $32,000 
D) $10,000

Question 13

Advertising totaled $10,000; $3,000 was indirect.What would be the best choice to use to allocate the indirect cost?

Accepted Answer

A) Allocate the indirect expense based on square feet. 
B) Allocate the indirect expense based on gross sales. 
C) Charge indirect expense to administrative expense. 
D) Allocate the indirect expense based on goods shipped. 
A) Allocate the indirect expense based on square feet. 
B) Allocate the indirect expense based on gross sales. 
C) Charge indirect expense to administrative expense. 
D) Allocate the indirect expense based on goods shipped.

Question 14

The following information is available for Charter Company:
$$\begin{array} { | c | r | r | r | } 
\hline { \text { Item } } & \text { Department1 } & \text { Department 2 } &  { \text { Total } } \
\hline \text { Equipment value } & \$ 500,000 & \$ 250,000 & \$ 750,000 \
\hline \text { Square footage } & 25,000 \text { sq.ft. } & 35,000 \text { sq.ft. } & 60,000 \text { sq.ft } \
\hline \text { Sales } & \$ 1,250,000 & \$ 725,000 & \$ 1,975,000 \
\hline
\end{array}$$ Complete the following chart to determine the total cost for each department,using the most appropriate method to apportion the indirect costs.
 $$\begin{array} { | l | r | r | r | } 
\hline { \text { Cost } } & \text { Department 1 } & \text { Department 2 } &  { \text { Total } } \
\hline \text { Depreciation } & & & \$ 120,000 \
\hline \text { Utilities } & & & \$ 45,000 \
\hline \text { Sales Commissions } & & & \$ 59,250 \
\hline \text { Rent } & & & \$ 150,000 \
\hline \text { TOTALS } & & & \$ 374,250 \
\hline
\end{array}$$

Accepted Answer

The answer of The following information is available for Charter...

Question 15

Eliminating one department may increase the sales of another department.

Accepted Answer

A) True 
 B)False

Question 16

A unit or department that incurs costs and generates revenues is a(n):

Accepted Answer

A) expense center. 
B) direct center. 
C) cost center. 
D) profit center. 
A) expense center. 
B) direct center. 
C) cost center. 
D) profit center.

Question 17

Departmental income statements would not be a useful to tool for management to determine the viability of a department.

Accepted Answer

A) True 
 B)False

Question 18

From the following,calculate income by departments.
 $$\begin{array} { l l l } 
 & \text { Dept. 1 } & \text { Dept. 2 } \
\text { Net 5ales } & \$ 8,000 & \$ 6,500 \
 \text { Cost of Goods Sold }& 5,000 & 3,200 \
\text { Delivery Expense } & 570 & 420 \
\text { Advertising Expense } & 390 & 310 \
\text { Depreciation Expense }& 620 & 530
\end{array}$$

Accepted Answer

The answer of From the following,calculate income by departments.
 \[\begin{array}...

Question 19

Sports Galore is trying to allocate its building's depreciation based on floor space.Determine the amount that should be assigned to the golf department and to the basketball department.
 $$\begin{array}{l}
\begin{array} { c c c } 
&\text { Golf } & \text { Basketball } & \text { Total } \
\text { Floor Space }&30,000 & 60,000 & 90,000 \
\text { Depreciation Exp }&& & \$ 39,000
\end{array}
\end{array}$$

Accepted Answer

Apportionment of depreciation

Question 20

Sales minus cost of goods sold yields:

Accepted Answer

A) operating expenses. 
B) gross profit. 
C) income before taxes. 
D) net income. 
A) operating expenses. 
B) gross profit. 
C) income before taxes. 
D) net income.

Exam 24: Departmental Accounting

Supporters of the contribution margin approach believe that:

If delivery expense is not traceable to a department,it would be considered a(n):

Calculate the costume jewelry department net income given the following: Sales \ 1,300 Direct operating expenses 300 Indirect operating expenses 250 Cost of goods sold 1,000

When a department showing a loss is eliminated,other departments will always achieve a greater contribution margin.

When a company tracks gross profit by department,the sales journal will:

Indirect expenses are the same across departments and industries.

What is the total gross profit of the company if there are three departments (A, B, and C) and the net sales are $200,000, $164,000, and $286,000, respectively, and cost of goods sold is $86,000, $92,000, and $82,000, respectively A)$390,000 B)$650,000 C)$400,000 D)$260,000

Which of the following indirect expenses would most likely be allocated on the basis of gross sales?

Advertising expense totaled $40,000.If indirect advertising costs are allocated based on gross sales per department,what amount would be allocated to the Jewelry department if $10,000 of advertising is indirect? Gross Sales: Jewelry,$60,000; Glassware,$50,000; Watches,$40,000.

Given the following,calculate contribution margin and net income: Indirect Net Sales DVD CD Expense Cost of Goods Sold \ 7,500 \ 3,900 4,100 1,800 Operating Expenses (Indirect) \ 2,600

Which of the following statements is incorrect?

If the music department in a department store is 8,000 square feet and the total square feet is 40,000,how much of the total building cost of $40,000 will be allocated to music?

Advertising totaled $10,000; $3,000 was indirect.What would be the best choice to use to allocate the indirect cost?

Eliminating one department may increase the sales of another department.

A unit or department that incurs costs and generates revenues is a(n):

Departmental income statements would not be a useful to tool for management to determine the viability of a department.

From the following,calculate income by departments. Dept. 1 Dept. 2 Net 5ales \ 8,000 \ 6,500 Cost of Goods Sold 5,000 3,200 Delivery Expense 570 420 Advertising Expense 390 310 Depreciation Expense 620 530

Sports Galore is trying to allocate its building's depreciation based on floor space.Determine the amount that should be assigned to the golf department and to the basketball department. Golf Basketball Total Floor Space 30,000 60,000 90,000 Depreciation Exp \ 39,000

Sales minus cost of goods sold yields:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes: The Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, plant, equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, dividends, treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Manufacturing Accounting

Filters