Question 8Step methodProsperous Bank has three support areas (administration, human resources, and accounting) and three revenue-generating areas (checkingaccounts, savings accounts, and loans). Monthly direct costs and the interdepartmental support structure are shown in the following benefits-provided ranking:Percentage of Service Used byDepartment Direct Costs Admin Human Resources Accounting Checking Savings LoansAdministration1010$1,080,000720,000600,0001,260,000675,0001,350,000Compute the total cost for each revenue-generating area of the bank using the step-method of cost allocation.Note: Do not round proportions in your calculations; round your final answer to the nearest whole dollar.Checking sSavingsLoansTotal SHuman resourcesAccountingCheckingSavingsLoans10101010103030404020202883020

Lets understand the basics. Step-method of cost allocation. The second method for dispersing service…

Answered: Question Step method Prosperous Bank…

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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Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Investe assets and condensed income statement data for the past year for each division are as follows: Sales Cost of goods sold Operating expenses Invested assets Required: Road Bike Division $ 5,610,000 2,468,000 2,076,100 5,100,000 Mountain Bike Division $ 5,880,000 2,764,000 1,763,600 4,200,000 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no service department charges. Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 20Y7 Road Bike Division Mountain Bike Division Sales Cost of goods sold Gross profit Operating expenses Income from operations
A quality control activity analysis indicated the following four activity costs of a hotel. Verifying credit card information $486,000 Customer service training 364,500 Discounting room rates due to poor customer service 243,000 Correcting charges to customer invoices 121,500 Total $1,215,000 Sales are $8,100,000 for the year. Prepare a cost of quality report. Round your answers to one decimal place, if necessary. Cost of Quality Report Quality Cost Percent of Quality Cost Percent of Total Quality Cost Classification Total Sales $ Prevention Appraisal Internal failure External failure Totals % 100 % % %
Vaibhav
Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike 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: Road Bike Division Mountain Bike Division Sales $ 3,190,000 $ 3,360,000 Cost of goods sold 1,404,000 1,579,000 Operating expenses 1,275,600 1,344,200 Invested assets 2,900,000 2,400,000 Required: 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no service department charges. Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 20Y7 Road Bike Division Mountain Bike Division Sales $fill in the blank 747434fe2fcbfee_1 $fill in the blank 747434fe2fcbfee_2 Cost of goods sold fill in the blank 747434fe2fcbfee_3 fill in the blank 747434fe2fcbfee_4 Gross…
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
Blossom Decor sells home decor items through three distribution channels-retail stores, the Internet, and catalog sales. Each distribution channel is evaluated as an investment center. Selected results from the latest year are as follows: Sales revenue Variable expenses Direct fixed expenses Average assets Required rate of return (a) Retail Online Catalog $ $ Retail Stores Internet $ $10,120,000 4,070,000 4,570,000 8,070,000 12% $4,070,000 Residual Income. 1,620,000 1,120,000 4,070,000 12% Calculate the current residual income for each distribution channel. (If the residual income is a loss then enter with a negative sign preceding the number, e.g. -5,125 or parenthesis, e.g. (5,125).) Catalog Sales $3,400,000 1,920,000 1,320,000 1,610,000 12%
Review Annual Profit Rate Given the following information compute the annual profit rate: Investment Duration (months) Balance Account 1000 250000 150000 12 24 6 Profit Distributable 30 23500 1500 Application Mudaraba The Unre tricted Investment Accounts (UIA) of an Islamic Bank are based on a Mudaraba agreements with a profit-sharing ratio of 40% (Mudarib) and 60% (Capital Provider). The Islamic bank invested the UIA balance of QR 2.500.000 million in an oil company for one year with the agreement to share the profit with the oil company using the following ratio 55% (Mudarib) and 45% (Capital Provider). At the end of the year the oil company earned QR 125.000 as profit. Find the income distributable to the UIA holders. Find the UIA holders annual profit rate. Suppose the market annual profit rate for the same type of Unrestricted Investment Accounts is 1.75 %. What would be the new profit-sharing ratio between the Islamic Bank and the Unrestricted Investment Accounts holders.
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The manager of the West store has concerns relating to the store’s financial performance and has asked for help analyzing transfer costs. After calculating the operating income in dollars and the operating income percent, analyze the following financial information to determine costs that may need further investigation. It may be helpful to perform a vertical analysis (i.e., perform a vertical analysis). warehouse west store sales $18,920 $43,860 cost of goods sold 9,082 21,053 gross profit $9,838 $22,807 selling expenses 860 2,752 wages expense 4,730 15,351 costs allocated from corporate 2,838 4,386 Total expenses $8,428 $22,489 operating income/(loss) $ ? ? Operating Income/(loss) % ? ?
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 Using Department Transactions IT Operations Retail Commercial Ө Ө 70% 30% 10% Ө 20% 30% 40% 50% Ө Ө 10% 40% $ 390,000 $ 810,000 $ 1,650,000 $ 3,850,000 $ 2,400,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. From: Costs Operations Allocated to: Transactions Retail Commercial IT $ 810,000 $ 162,000 $ 81,000 $ 243,000 $ 324,000 Operations Transactions Total $ 243,000 $ 324,000
Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating departments, organized according to the special Industry each department serves, are health care, retall, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost Annual revenue Req A1 Human Resources Department Reg A2 Billing Health Care Retail Legal Services Total *This is the operating cost before allocating service department costs. Allocation Rate 20 Req B1 $ 900,000 Complete this question by entering your answers in the tabs below. x X Billing Required a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and…

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