A department store has three divisions, A, B, and C, and conducts general advertising that benefits all divisions. The total advertising expense for the year is $60,000. The sales for each division are as follows: • Division A: $500,000 ⚫Division B: $400,000 • Division C: $300,000 Allocate the advertising expenses to Division B based on the proportion of total sales.
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- How much advertising expense should be allocatedAdams Cough Drops operates two divisions. The following information pertains to each division for Year 1. \table[[, Division A, Division B], [Sales, $203,000, $78,000A company has two departments, Y and Z that incur advertising expenses of $19,000. Advertising expenses are allocated based on sales. Department Y has sales of $300,000 and Department Z has sales of $700,000. The advertising expense allocated to Departments Y and Z, respectively, are: Multiple Choice O O O $5,700; $13,300. $13,300; $5,700. $8,200; $10,800.
- Arlington Clothing, Inc., shows the following information for its two divisions for year 1. Lake Region Coastal Region Sales revenue $ 4,160,000 $ 13,070,000 Cost of sales 2,691,300 6,535,000 Allocated corporate overhead 249,600 784,200 Other general and administration 553,900 3,755,000 Required: a. Compute divisional operating income for the two divisions. Ignore taxes. b-1. What are the gross margin and operating margin percentages for both divisions? b-2. How well have these divisions performed?Macee Department Store has three departments, and it conducts advertising campaigns that benefit all departments. Advertising costs are $126,000 this year, and departmental sales for this year follow. Department Sales $225,000 1 2 3 How much advertising cost is allocated to each department if the allocation is based on departmental sales? 450,000 225,000 Department Sales 1 2 3 Total % of Total Advertising to Allocate Allocated AmountArlington Clothing, Inc., shows the following information for its two divisions for year 1. Sales revenue Cost of sales Allocated corporate overhead Other general and administration Required: a. Compute divisional operating income for the two divisions. Ignore taxes. b-1. What are the gross margin and operating margin percentages for both divisions? b-2. How well have these divisions performed? Req A Complete this question by entering your answers in the tabs below. Operating income Lake Region $4,040,000 2,631,300 242,400 541,900 Req B1 stion 10- Hom... Req B2 Compute divisional operating income for the two divisions. Ignore taxes. (Enter your answers in thousa to 1 decimal place.) Coastal Region $12,950,000 6,475,000 777,000 3,743,000 Lake Region Coastal Region Reg A Req B1 > < Prev
- S Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the three divisions are as follows: Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes 23 Average invested assets Division A Division B Division C $ 1,290,000 $ 1,053,000 $ 1,052,000 797,000 71,000 55,000 9,511,000 773,000 59,000 48,000 2,259,000 764,000 60,000 48,000 3,716,000 Wescott is considering an expansion project in the upcoming year that will cost $5.7 million and return $521,000 per year. The project would be implemented by only one of the three divisions. Required: 1. Compute the ROI for each division. 2. Compute the residual income for each division. 3. Rank the divisions according to the ROI and residual income of each. 4-a. Compute the return on investment on the proposed expansion project. 4-b. Is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or…The vice president of operations of Pavone Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Business Division Consumer Division Sales $2,160,000 $2,520,000 Cost of goods sold 1,270,000 1,330,000 Operating expenses 652,400 837,200 Invested assets 744,828 2,100,000 Required: 1. Prepare condensed divisional income statements for the year ended December 31, assuming that there were no service department charges. 2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for each division. If required, round your final answers to one decimal place. 3. If management wants a minimum acceptable return of 17.00%, determine the residual income for each division. Use the minus sign to indicate a negative income. Round final answers to nearest…Burwell Manufacturing is organized into two divisions (Agriculture and Mining) and a corporate headquarters. The financial group of the corporate staff prepared financial operating plans (budgets) for the two divisions for the upcoming year (year 1). Selected information from the plans is as follows: Employees (full-time equivalent, or FTE) Revenues ($000) Direct division costs ($000) Operating profit before allocation ($000) Agriculture 23 $ 8,000 5,200 $ 2,800 Mining 52 $ 17,000 13,300 $ 3,700 Corporate overhead costs are expected to be $3.5 million in year 1. Of the $3.5 million, $1.25 million is fixed and the remainder is variable. Two-thirds of the variable cost is variable with respect to revenue. The other third is variable with respect to the number of full-time equivalent (FTE) employees. Division managers are evaluated and compensated in part on division operating profit (including any allocated corporate costs) relative to the budget. Corporate overhead at Burwell is…
- Adams Cough Drops operates two divisions. The following information pertains to each division for Year 1. Division A Division B $200,000 $85,000 $ 16,100 $ 9,300 $ 59,000 $37,000 17% Sales Operating income Average operating assets Company's desired rate of return 17% Required a. Compute each division's residual income. b. Which division increased the company's profitability more? a. Division A Division B b. The division that increased the company's profitability more is Residual IncomeA company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: The bases to be used in allocating expenses, together with other information, are as follows: a. Advertising expenseincurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, 375,000; Summer Sports Division, 715,000. b. Transportation expenseallocated to divisions at a rate of 4.00 per bill of lading: Winter Sports Division, 17,500 bills of lading; Summer Sports Division, 30,500 bills of lading. c. Accounts receivable collection expenseincurred at headquarters, allocated to divisions at a rate of 1.00 per invoice: Winter Sports Division, 25,000 sales invoices; Summer Sports Division, 43,000 sales invoices. d. Warehouse expenseallocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 60,000 square feet; Summer Sports Division, 90,000 square feet. Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Provide supporting computations for support department allocations.
