SB Exercise 6-16 through Exercise 6-17 (Algo) [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm specializing in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. It classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given below: Office Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable. to offices. Net operating income Total Company $ 531,000 265,500 265,500 148,680 116,820 Net operating income increase 74,340 $ 42,480 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 177,000 53,100 123,900 92,040 $ 31,860 S 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 354,000 212,400 141,600 56,640 $ 84,960 Exercise 6-16 Part 2 (Algo) Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5] 100.00% 60.00% 40.00% 16.00% 24.00% 2. How much would the company's net operating income increase if Minneapolis increased its sales by $88,500 per year? Assume no change in cost behavior patterns.

SB Exercise 6-16 through Exercise 6-17 (Algo) [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm specializing in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. It classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given below: Office Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable. to offices. Net operating income Total Company $ 531,000 265,500 265,500 148,680 116,820 Net operating income increase 74,340 $ 42,480 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 177,000 53,100 123,900 92,040 $ 31,860 S 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 354,000 212,400 141,600 56,640 $ 84,960 Exercise 6-16 Part 2 (Algo) Working with a Segmented Income Statement; Break-Even Analysis [LO6-4, LO6-5] 100.00% 60.00% 40.00% 16.00% 24.00% 2. How much would the company's net operating income increase if Minneapolis increased its sales by $88,500 per year? Assume no change in cost behavior patterns.

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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Raner, Harris and Chan is a consulting firm that specializes in Information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented Income statement for the company's most recent year is given: Office Chicago Sales Variable expenses Contribution margin Total Company $ 495,000 100% 247,5ee 58% 247,500 sex 138,600 28% 108,900 22% 69,300 14% $39,600 $ 165,000 100% 49,500 30% 115,500 70% 85,800 52% $ 29,700 18% Minneapolis $ 330,000 100% 198,000 60% 132,000 48% 52,800 16% 24% Traceable fixed expenses $ 79,200 Office segment margin Common fixed expenses not traceable to offices Net operating income 8% 3. Assume that sales in Chicago Increase by $55,000 next year and that sales in Minneapolis remain unchanged. Assume no change In fixed costs. a. Prepare a new segmented Income statement for the company. (Round your Intermediate calculations…
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs Required: IT HR 0 27 1,400 0 Publishing 1,400 35 Binding 4,200 51 $ 151,000 $ 247,500 $ 430,000 $390,000 Use the direct method to allocate these service department costs to the operating departments. Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Round "Publishing" and "Binding" answers to 2 decimal places. Service department costs IT allocation IT HR Publishing Binding HR allocation Total costs allocated S 0 $ 0 S 0.00 5 0.00
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs From: Service department costs IT HR Total IT $ 0 16 $ 152,000 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. HR 1,525 0 $ 247,950 152,000 Answer is not complete. Cost Allocation To: IT HR 152,000 $ 247,950 Publishing 2,440 24 $ 431,000 $ 247,950 Publishing $ Binding 2,135 40 $ 392,500 0 Binding 0
Problem 1-42 (Algo) Cost Data for Managerial Purposes (LO 1-3) Durham Parts (DP) makes a variety of products. It is organized in two divisions, Eastern and Western. The managers for each division are paid, in part, based on the financial performance of their divisions. The Western Division normally sells to outside customers but, on occasion, also sells to the Eastern Division. When it does, corporate policy states that the price must be cost plus 25 percent to ensure a "fair" return to the selling division. Western received an order from Eastern for 1,200 units. Western's planned output for the year had been 4,800 units before Eastern's order. Western's capacity is 6,000 units per year. The costs for producing those 4,800 units follow. Materials Direct labor Other costs varying with output Fixed costs (do not vary with output) Totals Total $ 374,400 182,400 144,000 288,000 $ 988,800 Per Unit $ 78 38 30 68 $ 206 Required: a. If you are the manager of the Western Division, what unit…
! Required information [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company Net operating income increase $ 463,500 231,750 231,750 129,780 101,970 64,890 $ 37,080 100.00% 50.00% 50.00% 28.00% 22.00% 14.00% 8.00% Chicago $ 154,500 46,350 108,150 80, 340 $ 27,810 Office 100.00% 30.00% 70.00% 52.00% 18.00% Minneapolis $ 309,000 185,400 123,600 49,440 $ 74,160 100.00% 60.00% 40.00% 16.00% 24.00% 2. By how much would the company's net operating income increase…
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs. IT HR 0 16 1,525 0 Publishing 2,440 24 $ 152,000 $ 247,950 $ 431,000 Binding 2,135 40 $ 392,500 Woodstock Binding estimates that the variable costs in the IT Department total $112,500, and in the HR Department variable costs to $142,500. Avoidable fixed costs in the IT Department are $18,250. Required: If Woodstock Binding outsources the IT Department functions, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations. × Answer is complete but not entirely correct. Maximum…
Required information Skip to question [The following information applies to the questions displayed below.] Zenon Computer competes at the retail level on the basis of customer service. It has invested significant resources in its customer service department. Recently, the company has installed a traditional activity-based costing (ABC) system to provide better cost information for pricing, decision making, and customer profitability analysis. Most of the costs of running the customer service department are considered committed (i.e., short-term fixed) costs (principally, personnel and equipment costs). The budgeted cost for the upcoming period is $832,000. Activity analysis, recently conducted when the ABC system was implemented, revealed the following information: Activities Percentage of Employee Time Estimated (Budgeted) Cost Driver Quantity Handling customer orders 75% 8,320 customer orders Processing customer complaints 10 416 customer complaints Conducting customer credit checks…
Assume a company's activity-based costing system includes three activities with the following activity rates: Activity Cost Pool Activity Rate Travel $ 2 per mile driven Deliveries $ 50 per delivery Customer service $ 22 per phone call Two of the company's many customers include Customer A and Customer B. These two customers consumed the company's activities as follows: Total Expected Activity Customer A Customer B Travel (number of miles driven) 300 250 Deliveries (number of deliveries) 15 5 Customer service (number of phone calls) 20 12 If the company earned $1,130 in revenue serving Customer B, then what is the customer margin for this customer? Multiple Choice $96 $156 $116 $136
Your company uses an activity-based costing system for its overhead costs. The following data is from its activity-based costing system. Activity Rates Cleaning $ 7.58 per hour Job support $20.74 per job Client support $25 per client One particular client requested 25 jobs during the year that required a total of 150 hours. For this service, the client was charged $2,000. What is customer margin for this client? (Round to the nearest dollar.) $ 345 $1,681 $1,656 $ 320
Required information [The following information applies to the questions displayed below.] Arctica manufactures snowmobiles and ATVS. These products are made in different departments, and each department has its own manager. Each responsibility performance report includes only those costs that the department manager can control: direct materials, direct labor, supplies used, and utilities. Budget For Year Ended December 31 Direct materials Direct labor Totals Department manager salaries Supplies used Utilities Rent Totals Snowmobile $ 19,810 10,700 ▸ 4,600 3,630 Controllable Costs Responsibility Accounting Performance Report Manager, Snowmobile Department For Year Ended December 31 Budgeted $ 390 6,000 $ 45,130 Prepare a responsibility accounting performance report for the snowmobile department. Note: Under budget amounts should be indicated by a minus sign. 0 $ ATV $ 27,800 20,800 5,500 Actual 930 570 6,600 $ 62,200 Actual Snowmobile $ 19,720 10,990 4,700 3,470 360 5,600 $ 44,840 Over…
Required information [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Office Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Net operating income i Total Company $ 495,000 247,500 247,500 138,600 108,900 69,300 $ 39,600 100.00% 50.00% 50.00% 28.00% 22.008 14.00% 8.00% Chicago $ 165,000 49,500 115,500 85,800 $ 29,700 100.00% 30.00% 70.00% 52.00 18.00% Minneapolis $ 330,000 198,000 132,000 52,800 $ 79,200 100.00% 60.00% 40.00% 16.00 24.00% 3. Assume that sales in Chicago increase by $55,000 next year and that sales in Minneapolis remain…
Job Order Costing for a Service Company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 45% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances $59,100 17,700 41,400 25,400 $143,600 Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages Total During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages…