• District expenses were allocated to the stores based on sales.• New England Region general and administrative expenses of $162,000 were allocated to the Coastal District. These expenseswere, in turn, allocated equally to the district's three stores.Required:1. Prepare the May segmented income statement for the Coastal District and for the New Haven and Boston stores.2. Compute the Portland store's operating income for May.4. The assistant controller for the New England Region, Jack Isner, has been a close friend of the New Haven store manager for over20 years. When Isner saw the segmented income statement (as prepared in requirement 1), he realized that the New Haven storemanager had really gone overboard on advertising expenditures. To make his friend look better to the regional management, hereclassified $25,000 of the advertising expenditures as miscellaneous expenses, and buried them in rent and other costs. Theassistant controller's actions violate several standards of ethical conduct for management accountants, including the following: Cathy's Classic Clothes is a retailer that sells to professional women in the northeast. The firm leases space for stores in upscaleshopping centers, and the organizational structure consists of regions, districts, and stores. Each region consists of two or moredistricts; each district consists of three or more stores. Each store, district, and region has been established as a profit center. At all|levels, the company uses a responsibility-accounting system focusing on information and knowledge rather than blame and control.Each year, managers, in consultation with their supervisors, establish financial and nonfinancial goals, and these goals are integratedinto the budget. Actual performance is measured each month.The New England Region consists of the Coastal District and the Inland District. The Coastal District includes the New Haven, Boston,and Portland stores. The Coastal District's performance has not been up to expectations in the past. For the month of May, the districtmanager has set performance goals with the managers of the New Haven and Boston stores, who will receive bonuses if certainperformance measures are exceeded. The manager in Portland decided not to participate in the bonus scheme. Since the districtmanager is unsure what type of bonus will encourage better performance, the New Haven manager will receive a bonus based onsales in excess of budgeted sales of $570,000, while the Boston manager will receive a bonus based on operating income in excessof budget. The company's operating income goal for each store is 12 percent of sales. The budgeted sales revenue for the Bostonstore is $530,000.Other pertinent data for May are as follows:• Coastal District sales revenue was $1,590,000, and its cost of goods sold amounted to $632,750.• The Coastal District spent $105,000 on advertising.• General and administrative expenses for the Coastal District amounted to $180,000.• At the New Haven store, sales were 45 percent of Coastal District sales, while sales at the Boston store were 40 percent of districtsales. The cost of goods sold in both New Haven and Boston was 44 percent of sales.• Variable selling expenses (sales commissions) were 6 percent of sales for all stores, districts, and regions.• Variable administrative expenses were 2.6 percent of sales for all stores, districts, and regions.• Maintenance cost includes janitorial and repair services and is a direct cost for each store. The store manager has complete controlover this outlay. Maintenance costs were incurred as follows: New Haven, $7,600; Boston, $800; and Portland, $4,700.• Advertising is considered a direct cost for each store and is completely under the control of the store manager. The New Havenstore.spent two-thirds of the Coastal District total outlay for advertising, which was 10 times the amount spent in Boston onadvertising.• Coastal District rental expense amounted to $130,000.• The rental expenses at the New Haven store were 40 percent of the Coastal District's total, while the Boston store incurred 30percent of the district total.• District expenses were allocated to the stores based on sales.• New England Region general and administrative expenses of $162,000 were allocated to the Coastal District. These expenses

Income Statement The purpose of preparing the income statement is to know the net income which was…

Answered: • District expenses were allocated to…

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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Macee Store has three operating departments, and it conducts advertising that benefits all departments. Advertising costs are $132,000. Sales for its operating departments follow. Department 1 2 3 Sales $ 245,000 450,800 284,200 How much advertising cost is allocated to each operating department if the allocation is based on departmental sales? Note: Do not round your intermediate calculations. Department Sales Percent of Total Cost Allocated 1 $ 245,000 25.00 % $ 2 450,800 46.00 % 3 284,200 29.00 % Total $ 980,000 100.00 %
Merton Electronics operates two retail outlets in Port Wren, one downtown and the other in Docklands. The stores share the use of a corporate staff responsible for functions such as personnel, IT, marketing, purchasing, and so on. The cost of the corporate activities for last year was $162,000. The following are the operating results for the two stores for the year: Downtown Docklands Sales revenue $ 720,000 $ 900,000 Number of employees 45 30 Required: Allocate the cost of the corporate activities to the two stores based on: Number of employees. store revenue.
Millard Corporation is a wholesale distributor of office products. It purchases office products from manufacturers and distributes them in the West, Central, and East regions. Each of these regions is about the same size and each has its own manager and sales staff. The company has been experiencing losses for many months. In an effort to improve performance, management has requested that the monthly income statement be segmented by sales region. The company's first effort at preparing a segmented income statement for May is given below. Sales Regional expenses (traceable): Cost of goods sold Advertising Salaries Utilities Depreciation Shipping expense Total regional expenses Regional income (loss) before corporate expenses Corporate expenses: Advertising (general) General administrative expense Total corporate expenses Net operating income (loss) Variable expenses: Total variable expenses Traceable fixed expenses: Total traceable fixed expenses Common fixed expenses: Total common…
Algebraic method Prosperous Bank has three support areas (administration, human resources, and accounting) and three revenue-generating areas (checking accounts, savings accounts, and loans). Monthly direct costs and the interdepartmental support structure are shown below: Percentage of Service Used by Department Direct Costs Admin. Human Resources Accounting Checking Savings Loans Administration $540,000 40 10 20 30 20 20 Human resources Accounting Checking Savings Loans 360,000 300,000 630,000 337,500 675,000 Checking $ Savings Loans Total 10 10 $ 2,842,500 10 10 10 10 Compute the total cost for each revenue-generating area of the bank using the algbraic method. Note: Do not round proportions in your calculations; round your final answer to the nearest whole dollar. Note: Round your final answers below to the nearest 100; for example, round 8,668 to 8,700. 0 x 0 x 0 x ✓ 30 30 40
A company has two service departments (S1 and S2) and two production departments (P1 and P2). Departmental data for January were as follows:
Pound Industries’ customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 15,700 calls and incurred costs of $329,700. If 3,150 of these calls were for the company's wholesale operation (the remainder were for the retail division), costs allocated to the retail division should amount to which of the following: A. $329,700. B. $66,150. C. $21. D. $263,550. E. $0.
3
Spiess Corporation has two major business segments--Apparel and Accessories. Data concerning those segments for December appear below: Sales revenues, Apparel Variable expenses, Apparel Traceable fixed expenses, Apparel Sales revenues, Accessories Variable expenses, Accessories Traceable fixed expenses, Accessories $ 699,000 $ 367,000 $ 179,000 $ 795,000 $ 483,000 $145,000 the Accessories business segment. Common fixed expenses totaled $231,000 and were allocated as follows: $89,000 to the Apparel business segment and $142,000 to Required: Prepare a segmented income statement in the contribution format for the company. Net operating income (loss) S Total Company Apparel Accessories 0 0 0 0 $ 0 0
Macee Store has three operating departments, and it conducts advertising that benefits all departments. Advertising costs are $110,000. Sales for its operating departments follow. Department Sales 1 $ 247,500 2 455,400 3 287, 100 How much advertising cost is allocated to each operating department if the allocation is based on departmental sales? Note: Do not round your intermediate calculations.
Igloo corporation operates two stores A and B. the following relates to store B; Sales revenue 87,000 variable operating expenses 39,000 fixed expenses traceable to b and controllable by B 5,000 traceable to b and controllabe by others 22,000 The profit margin controllable by store B's manager os:
The following cost data pertain to the operations of Quinonez Department Stores, Incorporated, for the month of September. Corporate headquarters building lease $ 78,000 Cosmetics Department sales commissions-Northridge Store $ 5,270 Corporate legal office salaries $ 66,500 Store manager's salary-Northridge Store $ 12,200 Heating-Northridge Store $ 20,400 Cosmetics Department cost of sales-Northridge Store $ 39,100 Central warehouse lease cost $ 9,800 Store security-Northridge Store $ 16,200 Cosmetics Department manager's salary-Northridge Store $ 4,310 The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are direct costs of the Cosmetics Department?
Macee Store has three operating departments, and it conducts advertising that benefits all departments. Advertising costs are $108,000. Sales for its operating departments follow. Department 2 Sales $ 272,500 523, 200 294,300 How much advertising cost is allocated to each operating department If the allocation is based on departmental sales? (Do not round your intermediate calculations.) Department Sales Percent of Total 1 2 3 Total % % % % Cost Allocated

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