FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 25: Departmentalized Profit and Cost Centers

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

Nondepartmentalized expenses include items often found under "Other Income and Other expense".

A) True
B) False

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

Taylor and King,CPAs installed a new computer system.When the needs of the various divisions were analyzed,it was determined that the Audit Division would require 40% of the capacity,the Tax Division would require 25% of the capacity,and the Business Consulting Division would require 35% of the capacity.The computer system will cost $240,000. How much of the computer system's cost will be allocated to the Tax Division?

A) $96,000.
B) $60,000.
C) $84,000.
D) $80,000.

E) A) and C)
F) B) and D)

Correct Answer

verified

B

Question 3

True/False

Review LaterAdd Note

Office expenses such as postage and stationery should be allocated on the basis of contribution margin of each department.

Which of the following is NOT a limitation to using departmental operating income?

The procedure for assigning indirect expenses to departments at the end of an accounting period is called

Department XYZ had sales of $90,000,direct expenses of $60,000 and indirect expenses of $50,000.The indirect expenses allocated to this department would have been incurred whether or not the department existed.If this department had been eliminated,the company's reported net income would have been

A logical way to allocate janitorial wages to various departments would be on the basis of ___________________.

Departmental financial statements are internal assessment tools used to assign responsibility for profits or losses.

Interest income and interest expense are treated as direct costs and are traced to departments or business segments.

The price at which goods are moved from one segment of a company to another is the ____________________ price.

Semidirect and indirect expenses are allocated to the sales department at the time the expenses are incurred.

Which of the following measurements provides a better basis for eliminating a department?

A business is said to ________________ when total revenues equal total expenses.

Apartment Unit A had collected $250,000 of rent in the third quarter whereas Apartment Unit B had collected $750,000 in the same period.The accounting office supports both offices with more time spent collecting receivables for Unit B.The company chose to use rent collections as its basis for allocating $125,000 in salary and benefits of the accounting department to each Unit.Apartment Unit B will have to absorb ____________ of cost related to accounting services for the quarter just ended.

A department's ____________________ is usually more important than its net income or net loss when management is considering whether to close the department.

Taylor and King,CPAs installed a new computer system.When the needs of the various divisions were analyzed,it was determined that the Audit Division would require 40% of the capacity,the Tax Division would require 25% of the capacity,and the Business Consulting Division would require 35% of the capacity.The computer system will cost $240,000. How much of the computer system's cost will be allocated to the Business Consulting Division?

If an attempt is made to identify and accumulate both revenue and cost data for a specific segment of a company,that segment is called a(n)____________________ center.

Management decisions involving the elimination of a department should be based on the contribution margin of the department.

Cost centers do not directly earn revenue.

Allocated expenses can be rounded to the nearest whole dollar on departmental income statements.