Exam 22: Performance Measurement and Responsibility Accounting

Flamingos,Inc.has four departments.The Administrative Department costs are allocated to the other three departments based on the number of employees in each and the Maintenance Department costs are allocated to the Assembly and Packaging Departments based on their occupied space.Data for these departments follows: The total amount of the Administrative Department's cost that would eventually be allocated to the Packaging Department is:

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Department 1's contribution to overhead as a percent of sales is:

Describe the information found on a responsibility accounting performance report.

Sturdivant Fasteners,Co.uses a traditional allocation of overhead based on direct labor hours.The manager has accumulated the following information on engineering changes,which are indirect cost of their products,for two of the company's major products: Compute the cost per unit using: The traditional two-stage allocation of the costs of engineering changes based on direct labor hours.

Ready Company has two operating (production)departments: Assembly and Painting.Assembly has 150 employees and occupies 44,000 square feet; Painting has 100 employees and occupies 36,000 square feet.Indirect factory expenses for the current period are as follows: Administration is allocated based on workers in each department; maintenance is allocated based on square footage. -The total amount of indirect factory expenses that should be allocated to the Assembly Department for the current period is:

Holo Company reported the following financial numbers for one of its divisions for the year; average total assets of $5,800,000; sales of $5,375,000; cost of goods sold of $3,225,000; and operating expenses of $1,147,000.Assume a target income of 15% of average invested assets.Compute residual income for the division:

Boiano Corp.operates a retail store and has two service departments and two operating departments,Hardware and Automotive.During the current year,the departments had the following direct expenses and occupied the following amount of floor space. The advertising department developed and aired 150 spots.Of these spots,60 spots were for Hardware and 90 spots were for Automotive.The store sold $1,500,000 of merchandise during the year; $675,000 in Hardware and $825,000 in Automotive.Indirect expenses include rent,utilities,and insurance expense.Total indirect expenses of $220,000 are allocated to all departments.Prepare a departmental expense allocation spreadsheet for Boiano.The spreadsheet should assign (1)direct expenses to each of the four departments,(2)allocate the indirect expenses to each department on the basis of floor space occupied,(3)the advertising department's expenses to the two operating departments on the basis of ad spots placed promoting each department's products,(4)the administrative department's expenses based on the amount of sales.Complete the departmental expense allocation spreadsheet below.Provide supporting computations for the expense allocations below the spreadsheet.

Arkansas Toys,a retail store,has three sales departments supported by two service departments.Cost and operational data for each department follow: Determine the service department expenses to be allocated to Sales Department 1 for (round answers to whole dollars): Advertising ________ Purchasing ________

Marks Corporation has two operating departments,Drilling and Grinding,and an office.The three categories of office expenses are allocated to the two departments using different allocation bases.The following information is available for the current period: -The amount of the total office expenses that should be allocated to Grinding for the current period is:

Division A produces a part with the following characteristics: Division B,another division in the company,would like to buy this part from Division A.Division B is presently purchasing the part from an outside source at $28 per unit.If Division A sells to Division B,$1 in variable costs can be avoided.Suppose Division A is currently operating at capacity and can sell all of the units it produces on the outside market for its usual selling price.From the point of view of Division A,any sales to Division B should be priced no lower than: