Exam 24: Performance Measurement and Responsibility Accounting

The Dark Chocolate Division of Yummy Snacks, Inc. had the following operating results last year: Sales (150,000 pounds of chocolate) \ 60,000 Variable expenses 37,500 Contribution margin 22,500 Fixed expenses 12,000 Profit \ 10,500 Assume that the Dark Chocolate Division is currently operating at its capacity of 200,000 pounds of chocolate. Also assume again that the Peanut Butter Division wants to purchase an additional 20,000 pounds of chocolate from Dark Chocolate. Under these conditions, what amount per pound of chocolate would Dark Chocolate have to charge Peanut Butter in order to maintain its current Profit?

A lumber mill bought a shipment of logs for $40,000. When cut, the logs produced a million board feet of lumber in the following grades. Compute the cost to be allocated to Type 1 and Type 2 lumber, respectively, if the value basis is used. Type 1-400,000 bd. ft. priced to sell at $0.12 per bd. ft. Type 2- 400,000 bd. ft. priced to sell at $0.06 per bd. ft. Type 3- 200,000 bd. ft. priced to sell at $0.04 per bd. ft.

The Mixed Nuts Division of Yummy Snacks, Inc. had the following operating results last year: Sales (140,000 pounds of product) \ 70,000 Variable expenses 42,000 Contribution margin \ 28,000 Fixed expenses \ 12,000 Income \ 16,000 Yummy expects identical operating results in the division this year. The Mixed Nuts Division has the ability to produce and sell 200,000 pounds of product annually. Assume that the Trail Mix Division of Yummy wants to purchase an additional 20,000 pounds of nuts from the Mixed Nuts Division. Mixed Nuts will be able to increase its profit by accepting any transfer price above:

An accounting system that accumulates and reports costs incurred by each service department for management to evaluate the performance of a department is a:

Chancellor Company is divided into four departments. Departments A and B are service departments and Departments 1 and 2 are operating (production) departments. The services of the two service departments are used by the other departments as follows: Dept. A Dept. B Dept. 1 Dept. 2 Services of: Department A \ldots\ldots\ldots 50\% 20\% 30\% Department B \ldots\ldots\ldots 40\% 60\% Direct costs incured by each department \ 60,000 \ 50,000 \ 70,000 \ 80,000 Complete the following table:

Regardless of the system used in departmental cost analysis:

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: Admin Maintenance Assembly Packaging Operating costs \ 30,000 \ 15,000 \ 70,000 \ 45,000 No. of employees 2 6 4 Sq. ft. of space 2,000 3,000 The total amount of the Administrative Department's cost that would eventually be allocated to the Packaging Department is:

A college uses advisors who work with all students in all divisions of the college. The most useful allocation basis for the salaries of these employees would likely be:

An accounting system that is set up to control costs and evaluate managers' performance by assigning costs to the managers responsible for controlling them is called a(n):

Which of the following is not one of the perspectives used to analyze performance using the balanced scorecard?

A company rents a small building with 10,000 square feet of space for $100,000 per year. The rent is allocated to the company's three departments on the basis of the value of the space occupied by each. Department One occupies 1,500 square feet of ground-floor space, Department Two occupies 3,500 square feet of ground-floor space, and Department Three occupies 5,000 square feet of second-floor space. If rent for comparable floor space in the neighborhood averages $15.00 per sq. ft. for ground-floor space and $10.00 per sq. ft. for second-floor space, what annual rent expense should be charged to each department?

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: Ottice Expenses Total Allocation Basis Salaries \ 30,000 Number of employees Depreciation 20,000 Cost of goods sold Advertising 40,000 Net sales Item Drilling Grinding Total Number of emplovees 1,000 1,500 2,500 Net sales \ 325,000 \ 475,000 \ 800,000 Cost of goods sold \ 75,000 \ 125,000 \ 200,000 -The amount of the advertising cost that should be allocated to Drilling for the current period is:

The type of department that generates revenues and incurs costs, and its manager is responsible for the investments made in operating assets is called a(n):

A company produces two products, XX and YY, from a single raw material called Zub. Zub is purchased in 55-gallon drums, and the contents of one drum are sufficient to produce 30 gallons of XX and 15 gallons of YY. XX sells for $10.00 per gallon and YY sells for $30.00 per gallon. During the current period, the company used 400 drums of Zub to produce XX and YY. The cost of Zub was $90 per drum. Required: (1) If the cost of Zub is allocated to the XX and YY products on the basis of the number of gallons produced, how much of the total cost of the 400 drums should be charged to each product? (2) If the cost of Zub is allocated to the XX and YY products in proportion to their market values, how much of the total cost of the 400 drums should be charged to each product? (3) Which basis of allocating the cost is most likely to be used by the company?

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: Ottice Expenses Total Allocation Basis Salaries \ 30,000 Number of employees Depreciation 20,000 Cost of goods sold Advertising 40,000 Net sales Item Drilling Grinding Total Number of emplovees 1,000 1,500 2,500 Net sales \ 325,000 \ 475,000 \ 800,000 Cost of goods sold \ 75,000 \ 125,000 \ 200,000 - The amount of the total office expenses that should be allocated to Drilling for the current period is:

In the two-stage cost allocation, ________ costs are allocated to operating departments, and the operating department costs are allocated to .

The difference between a profit center and an investment center is

A lumber mill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows: Grade Production Market Price Structural 25,000 board feet 1,350/1,000 bd. ft. No. 1 Common 75,000 board feet \ \ 750/1,000 bd. ft. No. 2 Common 100,000 board feet 300/1,000 bd. ft. Compute the portion of the $70,000 joint cost to be allocated to No. 2 Common if the value basis is used.

Riemer, Inc. has four departments. Information about these departments is listed below. Maintenance is a service department. If allocated maintenance cost is based on floor space occupied by each of the other departments, compute the amount of maintenance cost allocated to the Cutting Department. Maintenance Cutting Assembly Packaging Direct costs \ 18,000 \ 30,000 \ 70,000 \ 45,000 Sq. ft. of space 500 1,500 2,000 2,500 No. of employees 2 3 16 4