RevenuesCost of salesSelling, General andRegion I$ 1,209,000454,500433,500Region II$ 1,659,000814,500643,500Region III$ 2,259,0001,144,500863,500TotalCorporation$ 5,127,0002,413,5001,940,500Administrative (all fixed)Corporate overheadInformation on the division assets in the three regions of Lauderdale Corporation follows:Region IRegion II$ 709,000639,0001,301,000450,000Region IIILauderdale Corporation has a cost of capital of 8.6 percent.Required:a. Compute residual income for the three regions. Ignore taxes.b. How have these regions performed?

For Region I: 1. Net Operating Income (NOI): Revenues: $1,209,000 Cost of Sales: -$454,500 Selling,…

Answered: Revenues Cost of sales Selling, General…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 5E: Service department charges In divisional income statements prepared for Demopolis Company, the...

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Service department charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of 64,560, and the Purchasing Department had expenses of 40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: A. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. B. Using the cost driver information in (A), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. C. Why does the Residential Division have a larger support department allocation than the other two divisions, even though its sales are lower?
COMPUTING OPERATING INCOME The sales, cost of goods sold, and total operating expenses of departments A and B of Ash Company are as follows: Compute the departmental operating income for each department.
Responsibility accounting holds managers responsible for _______. A. all costs charged to their subunit B. all costs charged to their subunit plus a share of companywide fixed costs C. only the costs that they can control D. only the costs that they have personally approved
Divisional Income Statements 1. Admin Expenses, Operating Income before Support Department Allocations, Sales, Suuport Department Allocations. 2. Admin Expenses, Cost of Goods Sold, Gross Profit, Support Department Allocations 3. Gross Profit, Operating Income, Sales, Support Department Allocations 4. Admin Expenses, Cost of Goods Sold, Gross Profit, Support Department Allocations 5. Cost of Goods Sold, Operating Income before Support Department Allocations, Sales, Support Department Allocations 6. Gross Profit, Loss from Operations, Sales, Support Department Allocations 7. Gross Profit, Loss from Operations, Operating Income, Operating Income before Support Department Allocations
Corrections to service department charges Panda Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared The service department charge rate for the service department costs was based on revenues. The following additional information is available a.Does the operating income for the two divisions accurately measure performance? b.Using service charge rates for service department charges, correct the divisional income statements.
Management accounting: emphasizes special-purpose information relates to the company as a whole is limited to strictly cost figures is controlled by GAAP
When the manager has the responsibility and authority to make decisions that affect Costs and revenues but no responsibility for or authority over assets invested in the department, the department is called: A. A cost center B. A profit center C. An investment center D. A service department
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! Required information Sunrise Accounting provides basic tax services and "rent-a-controller" accounting services. Sunrise has identified three activity pools, the related costs per pool, the cost driver for each pool, and the expected use for each pool. Activity Transportation costs Electronic processing Office support Transportation costs Electronic processing Office support Total Overhead $ Total Activity Cost $50,000 Mileage 75,000 Processing hours 20,000 $ Cost Driver Using activity proportions, determine the amount of overhead assigned to Controller Services. (Do not round intermediate calculations.) 25 75 12 112 Administrative hours Expected Tax Services Usage 5,000 miles 20,000 hours 3,500 hours Expected Controller Services Usage 35,000 miles 30,000 hours 1,500 hours
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