Question 1

Sports apparel department's gross profit is $300,000; clothing department gross profit is $200,000; indirect advertising expense is $6,000.Indirect expense charged to the sports apparel department based on gross profit would be $3,600.

Accepted Answer

A) True 
 B)False

Question 2

The espresso department experienced the following revenue and expenses during October: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 17,000 \
\hline \text { Cost of Goods Sold } & 9,000 \
\hline \text { Direct Operating Expenses } & 4,000 \
\hline \text { Indirect Operating Expenses } & 2,000 \
\hline
\end{array}$$ The espresso departmental gross profit on sales is:

Accepted Answer

A) $2,000. 
B) $4,000. 
C) $8,000. 
D) $11,000.

Question 3

Which of the following is not a direct departmental expense in a sales department?

Accepted Answer

A) Sales salaries 
B) Delivery expense for related items 
C) Advertising for the sales department 
D) All are direct departmental expenses.

Question 4

A net income would occur if the contribution margin is less than indirect expenses.

Accepted Answer

A) True 
 B)False

Question 5

Departmental income statements are prepared to indicate how well each department is performing.

Accepted Answer

A) True 
 B)False

Question 6

To calculate departmental gross profit,separate accounts should be set up for Sales,Purchases,etc.,for each department.

Accepted Answer

A) True 
 B)False

Question 7

Explain the difference between a "cost center" and a "profit center."

Accepted Answer

The answer of Explain the difference between a "cost center"...

Question 8

A department with sales of $80,000 and cost of goods sold of $55,000 has a gross profit of $25,000.

Accepted Answer

A) True 
 B)False

Question 9

Carla's building expenses,which are indirect,are based on each department's square footage.Department A occupies 35,000 square feet.Department B occupies 55,000 square feet,and Department C occupies 10,000 square feet.If the building expenses total $250,000,how much is allocated to Department B?

Accepted Answer

A) $83,333 
B) $137,500 
C) $87,500 
D) $25,000

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

If gross sales for the tools department are $500,000 and gross sales for the appliances department are $300,000,what is the fraction used to apportion the indirect advertising for the appliances department if it is based on gross sales?

Accepted Answer

A) 1/2 
B) 1/3 
C) 3/8 
D) 2/3

Question 12

Most companies that prepare departmental income statements also prepare departmental balance sheets.

Accepted Answer

A) True 
 B)False

Question 13

The sales department of a construction firm is a(n):

Accepted Answer

A) profit center. 
B) cost center. 
C) investment center. 
D) allocation center.

Question 14

Prepare an income statement showing departmental contribution margin based on the following:
$$\begin{array} { l r r r } 
& \text { Dept. X } & \text { Dept. Y } & \text { Rent Expense } \
\text { Space (square feet) } & 17,500 & 35,000 & \
\text { Net Sales } & \$ 60,000 & \$ 40,000 & \
\text { Cost of Goods Sold } & 18,000 & 16,000 & \
\text { Rent Expense (allocated based on square feet) } & & & \$ 2,700
\end{array}$$

Accepted Answer

The answer of Prepare an income statement showing departmental contribution...

Question 15

What is the purpose for determining contribution margin?

Accepted Answer

A) To show the contribution by department toward covering indirect costs 
B) To help determine whether or not to eliminate a department 
C) To show the effect on net income each department 
D) All of these answers are correct.

Question 16

To determine how each profit center is performing,management would analyze the:

Accepted Answer

A) income tax rate. 
B) indirect expenses. 
C) gross profit for each profit center. 
D) other expenses.

Question 17

A cost center is evaluated on the volume of revenues generated.

Accepted Answer

A) True 
 B)False

Question 18

All of the following are used to compute gross profit except:

Accepted Answer

A) sales. 
B) sales returns and allowances. 
C) accounts receivable. 
D) purchases.

Question 19

Indirect expenses are normally:

Accepted Answer

A) subjective and approximate. 
B) assigned by arbitrary methods. 
C) assigned precisely by accepted methods. 
D) overlooked.

Question 20

A maintenance department would be an example of a:

Accepted Answer

A) cost center. 
B) direct expense. 
C) profit center. 
D) None of these answers are correct.

Exam 24: Departmental Accounting

Sports apparel department's gross profit is $300,000; clothing department gross profit is $200,000; indirect advertising expense is $6,000.Indirect expense charged to the sports apparel department based on gross profit would be $3,600.

Which of the following is not a direct departmental expense in a sales department?

A net income would occur if the contribution margin is less than indirect expenses.

Departmental income statements are prepared to indicate how well each department is performing.

To calculate departmental gross profit,separate accounts should be set up for Sales,Purchases,etc.,for each department.

Explain the difference between a "cost center" and a "profit center."

A department with sales of $80,000 and cost of goods sold of $55,000 has a gross profit of $25,000.

Carla's building expenses,which are indirect,are based on each department's square footage.Department A occupies 35,000 square feet.Department B occupies 55,000 square feet,and Department C occupies 10,000 square feet.If the building expenses total $250,000,how much is allocated to Department B?

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

If gross sales for the tools department are $500,000 and gross sales for the appliances department are $300,000,what is the fraction used to apportion the indirect advertising for the appliances department if it is based on gross sales?

Most companies that prepare departmental income statements also prepare departmental balance sheets.

The sales department of a construction firm is a(n) :

What is the purpose for determining contribution margin?

To determine how each profit center is performing,management would analyze the:

A cost center is evaluated on the volume of revenues generated.

All of the following are used to compute gross profit except:

Indirect expenses are normally:

A maintenance department would be an example of a: