Question 1

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

Accepted Answer

A) sales. 
B) purchase returns and allowances. 
C) rent expense. 
D) purchases.

Question 2

Normally,the report prepared for a department is a(n):

Accepted Answer

A) cash flow statement. 
B) statement of equity. 
C) income statement. 
D) balance sheet.

Question 3

A profit center and a cost center both generate costs.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would not be considered a direct expense?

Accepted Answer

A) Building expenses 
B) Advertising expense 
C) Administrative expense 
D) All of the above

Question 5

Windermere Corporation has 25,000 square feet in department A; 20,000 square feet in department B; and 55,000 square feet in department C.Janitorial services as based on square footages in each department.How will the $35,000 of janitorial services be allocated?

Accepted Answer

A) $19,250 to C; $7,000 to B; and $8,750 to A. 
B) $19,250 to A; $7,000 to B; and $8,750 to C. 
C) Split evenly ($11,666.67)to each department. 
D) Cannot be determined by given information.

Question 6

The toy department of a department store would be a cost center.

Accepted Answer

A) True 
 B)False

Question 7

Indirect expenses are allocated to departments based on:

Accepted Answer

A) decisions of the stockholders. 
B) directives from the board of directors. 
C) some reasonable basis,such as square footage. 
D) generally accepted accounting principles.

Question 8

When preparing an income statement showing departmental contribution margin:

Accepted Answer

A) indirect expenses are combined with direct expenses. 
B) indirect departmental expenses are added to contribution margin. 
C) direct expenses are subtracted from contribution margin on sales. 
D) None of these answers are correct.

Question 9

Which of the following expenses is the most difficult to allocate to departments?

Accepted Answer

A) Cost of goods sold 
B) Use of general supplies by everyone 
C) Salaries and wages 
D) Merchandise purchases

Question 10

Of two departments,the men's department has 8,000 square feet and the women's department has 22,000 square feet.Depreciation is divided by square footage.If total depreciation is $50,000,the total amount allocated to the men's department would be approximately $13,333.

Accepted Answer

A) True 
 B)False

Question 11

The financial statement(s)that can be broken down by departments would be:

Accepted Answer

A) income statement. 
B) balance sheet. 
C) statement of owner's equity. 
D) All of these answers are correct.

Question 12

If the gross sales for the computer department are $3,700 and the book department gross sales are $6,300,what is the allocation for advertising expense of $750 to these departments,based on gross sales?

Accepted Answer

A) Computer department $425; book department $325 
B) Computer department $375; book department $375 
C) Computer department $277.50; book department $472.50 
D) Computer department $462.50; book department $287.50

Question 13

Departmental reports are useful for all of the following purposes except:

Accepted Answer

A) determining performance. 
B) determining future revenue. 
C) controlling. 
D) planning.

Question 14

Which of the following would be a direct expense of a sales department?

Accepted Answer

A) Sales salaries 
B) Office salaries 
C) Advertising expense 
D) Sales salaries and Advertising expense

Question 15

In a cost center,the manager:

Accepted Answer

A) has the responsibility for controlling costs,but not directly generating revenue. 
B) is not responsible for controlling costs,but is responsible for generating revenue. 
C) is responsible for controlling costs and generating revenue. 
D) None of these answers are correct.

Question 16

The photography department in a department store experienced the following revenue and expenses during October: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 6,500 \
\hline \text { Cost of Goods Sold } & 2,800 \
\hline \text { Direct Operating Expenses } & 200 \
\hline \text { Indirect Operating Expenses } & 1,300 \
\hline
\end{array}$$ The photography departmental net income is:

Accepted Answer

A) $6,500. 
B) $3,700. 
C) $3,500. 
D) $2,200.

Question 17

A department income statement showing gross profit by department is a useful tool in analyzing performance of individual departments.

Accepted Answer

A) True 
 B)False

Question 18

A building's depreciation would be considered an indirect expense.

Accepted Answer

A) True 
 B)False

Question 19

Gross profit by department appears on the:

Accepted Answer

A) balance sheet. 
B) statement of retained earnings. 
C) statement of cash flows. 
D) income statement.

Question 20

The women's shoe department shows gross sales of $245,000 with the cost of the shoes $147,000.The men's shoe department shows gross sales of $184,000 with the cost of the shoes $110,000.What is the gross profit for each department respectively?

Accepted Answer

A) $392,000 and $294,000 
B) $245,000 and $184,000 
C) $98,000 and $74,000 
D) $429,000 and $257,000

Exam 24: Departmental Accounting

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

Normally,the report prepared for a department is a(n) :

A profit center and a cost center both generate costs.

Which of the following would not be considered a direct expense?

Windermere Corporation has 25,000 square feet in department A; 20,000 square feet in department B; and 55,000 square feet in department C.Janitorial services as based on square footages in each department.How will the $35,000 of janitorial services be allocated?

The toy department of a department store would be a cost center.

Indirect expenses are allocated to departments based on:

When preparing an income statement showing departmental contribution margin:

Which of the following expenses is the most difficult to allocate to departments?

Of two departments,the men's department has 8,000 square feet and the women's department has 22,000 square feet.Depreciation is divided by square footage.If total depreciation is $50,000,the total amount allocated to the men's department would be approximately $13,333.

The financial statement(s) that can be broken down by departments would be:

If the gross sales for the computer department are $3,700 and the book department gross sales are $6,300,what is the allocation for advertising expense of $750 to these departments,based on gross sales?

Departmental reports are useful for all of the following purposes except:

Which of the following would be a direct expense of a sales department?

In a cost center,the manager:

A department income statement showing gross profit by department is a useful tool in analyzing performance of individual departments.

A building's depreciation would be considered an indirect expense.

Gross profit by department appears on the:

The women's shoe department shows gross sales of $245,000 with the cost of the shoes $147,000.The men's shoe department shows gross sales of $184,000 with the cost of the shoes $110,000.What is the gross profit for each department respectively?