### Stand-Alone Revenue Allocation Case Study**Background:**Marble Company operates three departments specializing in furniture sales: the Sofa Department, the Easy Chair Department, and the Coffee Table Department. Products are available for individual purchase or as a bundled package. Each department is evaluated based on its performance, which is tied to the individual product sales.**Product Pricing Details:**| **Furniture** | **Individual Selling Price per Unit** | **Cost per Unit** ||-----------------|--------------------------------------|-------------------|| Sofas | $1,200 | $500 || Easy chairs | $500 | $300 || Coffee tables | $300 | $200 || **Bundle Purchase Price** | **$1,600** | |**Tasks for Revenue Allocation:**1. **Allocation by Selling Price:** Allocate the total revenue from the furniture bundle based on each product's individual selling price.2. **Allocation by Cost:** Allocate the total revenue from the furniture bundle based on each product's cost per unit.3. **Allocation by Physical Units:** Allocate the revenue using the number of individual units included in the bundle.4. **Discussion Question:** Identify and explain which basis of allocation is most appropriate for this situation.This case study provides an engaging analysis of revenue allocation methods, illustrating theoretical concepts with practical application.

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Answered: 16-33 Stand-alone revenue allocation.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 1-42 (Algo) Cost Data for Managerial Purposes (LO 1-3) Durham Parts (DP) makes a variety of products. It is organized in two divisions, Eastern and Western. The managers for each division are paid, in part, based on the financial performance of their divisions. The Western Division normally sells to outside customers but, on occasion, also sells to the Eastern Division. When it does, corporate policy states that the price must be cost plus 25 percent to ensure a "fair" return to the selling division. Western received an order from Eastern for 1,200 units. Western's planned output for the year had been 4,800 units before Eastern's order. Western's capacity is 6,000 units per year. The costs for producing those 4,800 units follow. Materials Direct labor Other costs varying with output Fixed costs (do not vary with output) Totals Total $ 374,400 182,400 144,000 288,000 $ 988,800 Per Unit $ 78 38 30 68 $ 206 Required: a. If you are the manager of the Western Division, what unit…
A company produces products type: A, B and C in three separate departments (production hall). Product lines crate segments in the company. Segment managers (segment A manager and segment B manager, segment C manager) are responsible for profitability of their departments. Asses the profitability of each segments (A, B and C) using variable costing method. Additional information: Department A sales 1000 items of product A priced $23 each (including 100 items for department B). Variable costs of department B equals $14,000 In the production process of type B product, product A is used as a semi-finished product. Variable costs of department A which are included as a cost of goods sold of product A equals $19,000 Department B sells on average 110 items of B product, priced $ 400 per item. Sales revenues form product C equals $70,000 Fixed costs of direct labour connected with segment (department) A – $2,000 Variable cost of units sold of product C is $25,000 Fixed cost of direct…
Required: Rank the support departments based on the percentage of their services provided to other support departments. Use this ranking to allocate the support departments’ costs to the operating departments based on the step-down method.
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The Long Term Care Plus Company has two service departments — actuarial and premium rating, and two operations departments — marketing and sales. The distribution of each service department's efforts to the other departments is shown below: FROM TO Actuarial Rating Marketing Sales Actuarial 0 % 10 % 20 % 70 % Rating 20 % 0 % 40.0 % 40.0 % The direct operating costs of the departments (including both variable and fixed costs) were as follows: Actuarial $ 70,000 Premium Rating $ 130,000 Marketing $ 56,000 Sales $ 65,000 The total cost accumulated in the marketing department using the reciprocal method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar): Multiple Choice $131,510. $151,690. $130,714. $171,759. $179,338.
Toxaway Company is a merchandiser that segments its business into two divisions-Commercial and Residential. The company's accounting intern was asked to prepare segmented income statements that the company's divisional managers could use to calculate their break-even points and make decisions. She took the prior month's companywide income statement and prepared the absorption format segmented income statement shown below: Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income. Total Company $ 885,000 572,300 312,700 276,000 $36,700 Commercial Residential $ 295,000 $ 590,000 418,900 153,400 141,600 171, 100 122,000 $ 19,600 154,000 $ 17,100 In preparing these statements, the intern determined that Toxaway's only variable selling and administrative expense is a 10% sales commission on all sales. The company's total fixed expenses include $73,500 of common fixed expenses that would continue to be incurred even if the Commercial or Residential…
Required information [The following information applies to the questions displayed below.] Arctica manufactures snowmobiles and ATVS. These products are made in different departments, and each department has its own manager. Each responsibility performance report includes only those costs that the department manager can control: direct materials, direct labor, supplies used, and utilities. Budget For Year Ended December 31 Direct materials Direct labor Totals Department manager salaries Supplies used Utilities Rent Totals Snowmobile $ 19,810 10,700 ▸ 4,600 3,630 Controllable Costs Responsibility Accounting Performance Report Manager, Snowmobile Department For Year Ended December 31 Budgeted $ 390 6,000 $ 45,130 Prepare a responsibility accounting performance report for the snowmobile department. Note: Under budget amounts should be indicated by a minus sign. 0 $ ATV $ 27,800 20,800 5,500 Actual 930 570 6,600 $ 62,200 Actual Snowmobile $ 19,720 10,990 4,700 3,470 360 5,600 $ 44,840 Over…
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Toxaway Company is a merchandiser that segments its business into two divisions-Commercial and Residential. The company's accounting intern was asked to prepare segmented income statements that the company's divisional managers could use to calculate their break-even points and make decisions. She took the prior month's companywide income statement and prepared the absorption format segmented income statement shown below: erences Mc. Graw H&M Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Total Company $ 825,000 555,500 269,500 260,000 $9,500 Commercial Residential $ 275,000 $ 550,000 154,000 401,500 121,000 148,500 114,000 146,000 $ 7,000 $ 2,500 In preparing these statements, the intern determined that Toxaway's only variable selling and administrative expense is a 10% sales commission on all sales. The company's total fixed expenses include $79,500 of common fixed expenses that would continue to be incurred even if the Commercial or…
The Long Term Care Plus Company has two service departments — actuarial and premium rating, and two operations departments — marketing and sales. The distribution of each service department's efforts to the other departments is shown below: FROM TO Actuarial Rating Marketing Sales Actuarial 0 % 10 % 20 % 70 % Rating 10 % 0 % 40.0 % 50.0 % The direct operating costs of the departments (including both variable and fixed costs) were as follows: Actuarial $ 80,000 Premium Rating $ 70,000 Marketing $ 40,000 Sales $ 86,000 The total cost accumulated in the sales department using the reciprocal method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar): Multiple Choice $89,091 $109,271. $186,909. $129,340. $136,919.
A-6

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