Dunedin Bank has two operating departments (Retailand Commercial) and three service departments:Operations, Information Technology (IT), andTransactions. For the last period, the following costs andservice department usage ratios were recorded:Supplying Department Using Department TransactionsIT Operations Retail Commercial Transactions000 70% 30% IT 10 % 0 40% 30% 20% Operations60% 0 0 10% 30% Direct cost $ 440,000 $860,000 $1,700,000 $3,900,000 $2,450,000 Required: a.Allocate the service department costs to the twooperating departments using the reciprocal method.

Detailed Explanation of Service Department Cost Allocation Using the Reciprocal Method:Step 1:…

Answered: Dunedin Bank has two operating…

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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Fashion Forward, Inc. is decentralized into two divisions which are investment centers: Men’s Wear and Women’s Wear. For the past year, the Women’s Wear division had the following ratios: Return on Investment 27% Profit Margin 15% Investment Turnover 1.8 The following data relates to the Men’s Wear division for the past year. Sales $18,000,000 Cost of goods sold $12,000,000 Operating expenses $4,200,000 Invested assets $10,000,000 Question: Prepare a divisional income statement for the Men’s Wear division for the past year and Calculate the Return on Investment (ROI) for the Men’s Wear division for the past year (show work)
ndi Systems Inc., headquartered in Bengaluru, India, provides specialized information technology (IT) services and consists of three divisions: (1) insurance, (2) retail and (3) hospitality. For 2023, it recorded the following data: Insurance Retail Hospitality Total Sales revenues $ 4,017,000 $ 5,824,000 $ 1,944,000 $ 11,785,000 Variable costs (% of sales) 30 % 41 % 44 % Traceable fixed costs 2,121,000 2,852,000 724,500 5,697,500 Common fixed costs 1,200,000 Required: 1. Prepare a segment performance report showing the segment margin in dollars and percentages for all three divisions. Use Exhibit 12–3 as a guide. (Round "Percentage" answers to 2 decimal places.) 2. Which segment is most profitable? multiple choice Insurance Retail Hospitality
HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts in percentages) to the other departments is shown in the following table: From Actuarial Premium Actuarial 20% To Actuarial $80,000 Premium 15,000 rating Advertising 60,000 Sales 40,000 Premium Rating Advertising Sales 808 108 10% 20 60 The direct operating costs of the departments (including both variable and fixed costs) are: Required: 1. Determine the total costs of the advertising and sales departments after using the direct method or allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.
Nicholas Technologies operates two divisions. Hardware Services and Software Services. During the current month, the two divisions reported the following results. Hardware Sales Varlable costs (as a percentage of sales) Traceable fixed costs Software $ 850, 000 45% $ 125, 000 $ 660, 000 40% $ 250,000 In addition, fixed costs common to both divisions amounted to $228,000. Prepare an income statement showing percentages as well as dollar amounts. Conclude your statement with income from operations for the business and with the responsibility margin for each division. (Round percentage answers to 2 decimal place. i.e. 0.1234 should be considered as 12.34%.) NICHOLAS TECHNOLOGIES Responsibility Income Statement For the Current Month Entire Company Hardware Servicos Division Software Services Division Percent of Sales Dollars Dollars Percent of Sales Dollars Percent of Sales
Income for Profit Center The centralized computer technology department of Crutchfield Company has costs of $982,500. The department has provided a total of 13,100 hours of service for the period. The Retail Division has used 5,900 hours of computer technology service during the period, and the Commercial Division has used 7,200 hours of computer technology service. Additional data for the two divisions is following below: RetailDivision CommercialDivision Sales $6,320,000 $4,950,000 Cost of goods sold 3,190,000 2,220,000 Selling expenses 502,000 489,000 Determine the divisional income from operations for the Retail Division and the Commercial Division.
A retailing company has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows: Total Department Hardware Linens Sales $ 4,070,000 $ 3,000,000 $ 1,070,000 Variable expenses 1,350,000 950,000 400,000 Contribution margin 2,720,000 2,050,000 670,000 Fixed expenses 2,320,000 1,470,000 850,000 Net operating income (loss) $ 400,000 $ 580,000 $ (180,000) A study indicates $379,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 20% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Note* The answer is not $23,900
HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: From Actuarial Premium To Premium Rating 70% Actuarial 20% The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial $ 81,000 Premium rating Advertising Sales 16,000 61,000 41,000 Advertising sales, 15% 20 15% 60 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.
Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $490,000 $125,000 $365,000 Variable expenses 288,800 62,500 226,300 Contribution margin 201,200 62,500 138,700 Traceable fixed expenses 111,650 34,790 76,860 Segment margin 89,550 $ 27,710 $ 61,840 Common fixed expenses 36,910 Net operating income $ 52,640 The break-even in sales dollars for Division Q is closest to:
Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Transactions Total 8 18% 70% $ 310,000 IT Costs Operations S 250,000 $ 750,000 670,000 x 1,510,000 x Using Department Operations 8 8 8 $ $ 730,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. x Answer is complete but not entirely correct. Allocated to: Transactions 250,000 XS 2,233,333 x $ 8 30% 8 $ 1,570,000 $ 3,770,000 Retail 0X X $ Retail OX 0x 0 Commercial S 70% 30% 18% 833,333 X 0x 0 x 833,333 Commercial 30% 38% 28 $ 2,320,000
Giardin Outdoors is a recreational goods retaller with two divisions: Online and Stores. The two divisions both use the services of the corporate Finance and Accounting (F and A) Department. Annual costs of the F and A Department total $5.2 million a year. Managers In the two operating divisions are measured based on division operating profits. The following selected data are available for the two operating divisions: Revenues (5000) $ 74,100 39,900 Online Stores Required: Determine the cost allocation if $3.8 million of the F and A costs are fixed and allocated on the basis of revenues, and the remaining costs, which are variable, are allocated on the basis of transactions. Note: Do not round Intermediate calculations. Enter your answers in dollars, not in millions or thousands. Fixed Variable Total $ Transactions (000) 1,066.5 283.5 Online $ Stores
Morrell Financial Services (MFS) has three service departments: Accounting, Information Technology (IT), and Personnel. MFS also has two operating departments (Advice and Brokerage). Data on service department usage and service direct costs follow: Accounting IT Personnel Direct cost Using Department Accounting IT Personnel Advice 0% 16% 6% 23% 31% Brokerage 40% 0% 10% 29% 45% 11% 13% 0% 39% 37% $ 197,000 $ 281,000 $ 264,500 NA NA* *Not applicable for this problem. Required: Assume that Morrell Financial Services uses the reciprocal method of service department cost allocation. What is the total service department cost allocated to Advice? To Brokerage? (Hint: Use the reciprocal method spreadsheet shown in Exhibit 11.22 as a start to your analysis.) Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollars. Advice Brokerage Cost Allocated
Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $587,000 $172,000 $415,000 Variable expenses 376,090 98,040 278,050 Contribution margin 210,910 73,960 136,950 Traceable fixed expenses 105,290 30,870 74,420 Segment margin 105,620 $ 43,090 $ 62,530 Common fixed expenses 68,550 Net operating income $ 37,070 The break-even in sales dollars for Division Q is closest to:

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