Question 1

A profit center and a cost center both generate revenue.

Accepted Answer

A) True 
 B)False

Question 2

Direct expenses are assigned to departments based on the actual expenses incurred.

Accepted Answer

A) True 
 B)False

Question 3

The availability of suppliers and a firm's potential capacity is a consideration before a department is added.

Accepted Answer

A) True 
 B)False

Question 4

Administrative expenses are:

Accepted Answer

A) indirect expenses. 
B) direct expenses. 
C) not broken down by department. 
D) All of these answers are correct. 
A) indirect expenses. 
B) direct expenses. 
C) not broken down by department. 
D) All of these answers are correct.

Question 5

Direct expenses are those expenses that:

Accepted Answer

A) can be identified with a specific department. 
B) cannot be identified with a specific department. 
C) can be identified with more than one department. 
D) None of these answers are correct. 
A) can be identified with a specific department. 
B) cannot be identified with a specific department. 
C) can be identified with more than one department. 
D) None of these answers are correct.

Question 6

Below is a list of expenses (direct and indirect).You are to determine the total direct cost for departments A and B.
Salary Expense $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$\$ 8,444$ 
$\begin{array}{lcc}
\text { Department }&[\mathrm{A}]&[\mathrm{B}]\
\text { Cost of Goods Sold } & \$ 100,000 & \$ 300,000 \
\text { Employees } & 2 & 6 \
\text { Value of Equipment in each area } & \$ 8,000 & \$ 12,000 \
\text { Square footage of use } & 200 \text { sq. ft. } & 400 \text { sq. ft. }
\end{array}$

Direct cost for department A $ ________ B $ ________

Accepted Answer

Direct cost for department A $

Question 7

Hawkeye Golf is considering dropping the clothing department because it is not generating a profit as disclosed by the following data:
 $$\begin{array} { l l } 
 \text { Sales } & \$ 1,800 \
\text { Cost of Goods Sold } & \underline { 800 }  \
\text { Grom Profit on Sales } &\$ 1,000 \
\text { Direct Expenses } &700  \
\text { Indirect Expenses } & \underline{\$ 500}\
\text { Net Loss } &\underline{ \$ (200)} \
\end{array}$$ Note: None of the indirect expenses can be avoided by dropping the department.
Should Hawkeye drop the department? Show your computations.

Accepted Answer

At this point the department is contribu

Question 8

The photography department in a department store experienced the following revenue and expenses during October: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 23,500 \
\hline \text { Cost of Goods Sold } & 8,200 \
\hline \text { Direct Operating Expenses } & 1,000 \
\hline \text { Indirect Operating Expenses } & 2,300 \
\hline
\end{array}$$ The photography departmental gross profit on sales is:

Accepted Answer

A) $15,300. 
B) $20,200. 
C) $13,000. 
D) $14,300. 
A) $15,300. 
B) $20,200. 
C) $13,000. 
D) $14,300.

Question 9

A human resource department would be a profit center.

Accepted Answer

A) True 
 B)False

Question 10

In departmental accounting,it is necessary to break down revenue,but not expenses by departments.

Accepted Answer

A) True 
 B)False

Question 11

Indirect expenses are subjective in nature and may be allocated in a number of ways.

Accepted Answer

A) True 
 B)False

Question 12

Compute net income for the housewares department,when gross profit is $550,000,direct expenses $235,000,indirect expenses are $110,000 and sales are $875,000.

Accepted Answer

A) ($20,000) 
B) $530,000 
C) $205,000 
D) $325,000 
A) ($20,000) 
B) $530,000 
C) $205,000 
D) $325,000

Question 13

Which of the following would be a direct expense?

Accepted Answer

A) Depreciation expense 
B) Sales salaries 
C) Building expense 
D) Administrative expense 
A) Depreciation expense 
B) Sales salaries 
C) Building expense 
D) Administrative expense

Question 14

The photography department in a department store experienced the following revenue and expenses during October: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 23,500 \
\hline \text { Cost of Goods Sold } & 8,200 \
\hline \text { Direct Operating Expenses } & 1,000 \
\hline \text { Indirect Operating Expenses } & 2,300 \
\hline
\end{array}$$ The photography department's contribution margin is:

Accepted Answer

A) $15,300. 
B) $20,200. 
C) $13,000. 
D) $14,300. 
A) $15,300. 
B) $20,200. 
C) $13,000. 
D) $14,300.

Question 15

To calculate gross profit,subtract cost of goods sold and operating expenses from net sales.

Accepted Answer

A) True 
 B)False

Question 16

Advertising expense totaled $20,000.If indirect advertising costs are allocated based on gross sales per department,what amount would be allocated to the glassware department if $5,000 of advertising is indirect? 
Gross Sales: jewelry,$80,000; glassware,$30,000; watches,$40,000.

Accepted Answer

A) $1,000 
B) $1,333 
C) $2,500 
D) $2,667 
A) $1,000 
B) $1,333 
C) $2,500 
D) $2,667

Question 17

A indirect expense should be traceable to a respective department.

Accepted Answer

A) True 
 B)False

Question 18

The PPC department of Ajax shows gross sales of $730,600 for computer supplies and $934,900 for office supplies.The cost of the computer supplies was $534,000 and the cost of the office supplies was $491,400.What is the gross profit for each category of the department respectively?

Accepted Answer

A) $730,600 and $934,900 
B) $534,000 and $491,400 
C) $239,200 and $400,900 
D) $196,600 and $443,500 
A) $730,600 and $934,900 
B) $534,000 and $491,400 
C) $239,200 and $400,900 
D) $196,600 and $443,500

Question 19

If the cosmetic department in the store measures 10,000 square feet and the total building cost is $30,000 for a 40,000 square foot building,the cost that would be allocated to the cosmetic department would be:

Accepted Answer

A) $30,000. 
B) $10,000. 
C) $22,500. 
D) $7,500. 
A) $30,000. 
B) $10,000. 
C) $22,500. 
D) $7,500.

Question 20

From the following partial data,prepare a departmental income statement showing income before tax along with net income for Mason Corporation for the month ended December 31.
$$\begin{array} { l r } 
\text { Net Sales-Sporting Goods } & \$ 3,000 \
\text { Net Sales-Shoes } & 1,500 \
\text { Cost of Goods Sold-Sporting Goods } & 1,950 \
\text { Cost of Goods Sold-Shoes } & 900 \
\text { Income Tax Rate is } 30 \% & \
\text { Sporting Goods Dept.-5,000 square feet } & \
\text { Shoe Dept.-3,000 square feet } &
\end{array}$$
The following items are indirect expenses and should be allocated:
$$\begin{array}{l}
\quad\quad\quad\quad\quad\quad\quad\text { Basis of Appropriation }\
\begin{array} { l r l } 
\text { Building Expense } & \$ 240 & \text { Square Footage } \
\text { Delivery Expense } & \$ 135 & \text { Net Sales } \
\text { Depreciation Expense } & \$ 40 & \text { Square Footage }
\end{array}
\end{array}$$

Accepted Answer

Mason Corporation

Exam 24: Departmental Accounting

A profit center and a cost center both generate revenue.

Direct expenses are assigned to departments based on the actual expenses incurred.

The availability of suppliers and a firm's potential capacity is a consideration before a department is added.

Administrative expenses are:

Direct expenses are those expenses that:

The photography department in a department store experienced the following revenue and expenses during October: Sales \ 23,500 Cost of Goods Sold 8,200 Direct Operating Expenses 1,000 Indirect Operating Expenses 2,300 The photography departmental gross profit on sales is:

A human resource department would be a profit center.

In departmental accounting,it is necessary to break down revenue,but not expenses by departments.

Indirect expenses are subjective in nature and may be allocated in a number of ways.

Compute net income for the housewares department,when gross profit is $550,000,direct expenses $235,000,indirect expenses are $110,000 and sales are $875,000.

Which of the following would be a direct expense?

The photography department in a department store experienced the following revenue and expenses during October: Sales \ 23,500 Cost of Goods Sold 8,200 Direct Operating Expenses 1,000 Indirect Operating Expenses 2,300 The photography department's contribution margin is:

To calculate gross profit,subtract cost of goods sold and operating expenses from net sales.

Advertising expense totaled $20,000.If indirect advertising costs are allocated based on gross sales per department,what amount would be allocated to the glassware department if $5,000 of advertising is indirect? Gross Sales: jewelry,$80,000; glassware,$30,000; watches,$40,000.

A indirect expense should be traceable to a respective department.

The PPC department of Ajax shows gross sales of $730,600 for computer supplies and $934,900 for office supplies.The cost of the computer supplies was $534,000 and the cost of the office supplies was $491,400.What is the gross profit for each category of the department respectively?

If the cosmetic department in the store measures 10,000 square feet and the total building cost is $30,000 for a 40,000 square foot building,the cost that would be allocated to the cosmetic department would be:

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

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