The accounts department investigates all applications from new customers for creditsales. It has incurred a cost of £2,500 in January to investigate 100 customerapplications. The accounts department has apportioned the cost as £1,250 each todivisions A and B because each has the same level of sales. The manager of divisionA has claimed that this is unfair because she only asked for 20 investigations whiledivision B asked for 80 investigations. Which of the following statements is/arecorrect?• (i) Activity-based costing would charge £500 to division A and £2,000 todivision B.●(ii) Activity-based costing forecasts that the customer investigation costs forFebruary will be £500 for division A and £2,000 for division B.(iii) Activity-based costing makes managers more aware of the costs incurredby their operations.●a) (i) and (iii) onlyb) (i) and (ii) onlyc) (i), (ii) and (iii)d) (ii) and (iii) only

ABC costing means Activity based costing.It is used to allocation of manufacturing overhead to…

Answered: The accounts department investigates…

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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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 Region West Central East Sales $ 311,000 $ 796,000 $ 703,000 Regional expenses (traceable): Cost of goods sold 94,000 240,000 312,000 Advertising 105,000 236,000 240,000 Salaries 54,000 54,000 107,000 Utilities 8,700 16,100 13,600 Depreciation 21,000 35,000 28,000 Shipping expense 17,000 31,000 36,000 Total regional expenses 299,700 612,100 736,600 Regional income (loss) before corporate expenses 11,300…
I need help with this: Certain operating information is shown below for Palmer Department Store: Department A Department B All Other Departments Sales $600,000 $900,000 $2,100,000 Traceable expenses 105,000 165,000 600,000 Common expenses 90,000 120,000 300,000 Gross profit percentage 30% 40% 50% The managers are disappointed with the operating results of department A. They do not believe that competition will permit raising prices; however, they believe that spending $21,000 more for promoting this department's products will increase the physical volume of products sold by 20%. An alternative is to discontinue department A and use the space to expand department B. It is believed that department B's physical volume of products sold can thus be increased 37.5%. Special sales personnel are needed, however, and department B's traceable expenses would increase by $90,000. Neither alternative would appreciably affect the total common department expense. Required a)…
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Dawson Co’s computerised wages program is backed up daily, however for a period of 3 months the wages records and the back-ups have been corrupted, and therefore cannot be accessed. Wages and salaries for these 3 months are $32m. Profit before tax is $200m. Reproduce a standard audit report to give your views on this situation. *Report to be prepared as per ACCA format.
On September 9, Mavtech paid $30,000 in advance to suppliers to buy 30 computers. On September 10, Mavtech paid $450 and bought office supplies The computers that were paid for on September 9th were delivered to Mavtech on September 15. On September 17, a customer placed an order on Mavtech for 25 computers for a total price of $31,000. (This does not meet revenue recognition criteria.) On September 21, Mavtech hired an employee. The employee’s wage was fixed at $2,400 per month. The employee will be paid every month on the 21st. The first payment will be made on October 21. On September 22, Mavtech purchased an additional 40 computers for $40,000 on credit, due for payment on October. Prepare Journal Entry
Dawson Co’s computerised wages program is backed up daily, however for a period of 3 months the wages records and the back-ups have been corrupted, and therefore cannot be accessed. Wages and salaries for these 3 months are $32m. Profit before tax is $200m. Reproduce a standard audit report(Disclaimer of opinion) to give your views on this situation. *Only mention appropriate extracts which are relevant.
as
Burdeno Appliances has two divisions, Sales and Financing. Sales is responsible for selling Burdeno's inventory and maintaining inventory for future sale. Financing Division takes loan applications, packages loans into pools, and sells them in the financial markets. It also services the loans. Both divisions meet the requirements for segment disclosures under accounting rules. Sales Division had $8 million in sales last year. Costs, other than those charged by Financing Division, totaled $6 million. Financing Division earned revenues of $2.5 million from servicing loans and incurred outside costs of $3 million. In addition, Financing charged Operations $900,000 for loan-related fees. Sales' manager complained to corporate that Financing was charging 150 percent of the commercial rate for loan-related fees and that Sales would be better off sending its buyers to an outside lender Financing's manager replied that although commercial rates could be lower, servicing these loans is more…
Provide FOUR objectives of the internal control that should be exercised over a wages system.
Elite services both residential and commercial clients. Management believes that the commercial sector has more growth opportunities and is considering dropping the residential services. Twenty employees worked a total of 20,000 hours last year, 13,000 of which was on the residential jobs. Wages were $25 an hour and any materials used are included in overhead as supplies. All overhead is allocated on the basis of labor hours worked which is also the basis for charging customers. Because of increased competitions for commercial accounts, Elite charges $60 per hour for residential work but can only charge $45 per hour for commercial work. REQUIRED: If overhead for the year was $205,000, with 20,000 hours worked last year, what were the profits of the residential and commercial services using labor hours as the allocation base? RESIDENTIAL COMMERCIAL Revenues Less: Direct Labor Cost Overhead 205,000 205,000 Profit earned last year…
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 % % %
Hughes Payroll and Clerical Services (HPCS) provides payroll, bookkeeping, and other services to small businesses. HPCS financial records show the following costs for last quarter (QTR 1): Supplies Employee costs Total administration $ 14,000 1,015,000 455,000 HPCS recorded 4,375 billable hours in QTR 1 and fixed administrative cost was $245,000. Assuming no change in billable hours in the next quarter (QTR 2), supplies costs are expected to increase by 5 percent. Direct labor costs are expected to increase by 12 percent. Variable administration per billable hour is expected to remain the same, but fixed administration cost is expected to decrease by 7 percent. Required: a. HPCS expects to bill 5,425 hours next quarter. What are the estimated direct materials, direct labor, variable overhead, and fixed overhead costs for next quarter (QTR 2)? b. Determine the total costs per billable hour for QTR 1 and QTR 2. Complete this question by entering your answers in the tabs below. Required A…

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