Homework Help is Here – Start Your Trial Now!
Business
Accounting
The total revenue earned by each operating division is Audit, $847,000; Tax, $1,140,000; and Advisory, $584,000. Evaluate the profitability of each operating division, first using the costs from part (a) and then using the costs from part (b). Compare the gross margin percentages for each of these divisions to their profit margin percentages. (Round percentage answers to 1 decimal place, e.g. 15.2% and dollar answers to 2 decimal places, e.g. 15.25.) Scenario (a) $ $ Tax % $ % $ Advisory %

The total revenue earned by each operating division is Audit, $847,000; Tax, $1,140,000; and Advisory, $584,000. Evaluate the profitability of each operating division, first using the costs from part (a) and then using the costs from part (b). Compare the gross margin percentages for each of these divisions to their profit margin percentages. (Round percentage answers to 1 decimal place, e.g. 15.2% and dollar answers to 2 decimal places, e.g. 15.25.) Scenario (a) $ $ Tax % $ % $ Advisory %

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Please don't give image format
As the managing partner of Bramble Accounting Services (HAS), Adam is trying to compare the profitability results of the firm's three different business lines: Audit, Tax, and Advisory Services. These three operating divisions are supported by three support departments: Billing, Human Resources, and IT. The cost drivers (or allocation bases) for each of the support departments, along with each department's usage of those services and its own original costs, are as follows. Original cost Billing hours used Number of employees IT hours used Support Departments Billing $71,000 2 100 HR $116,000 2 200 IT $94,000 1 200 Audit Operating Divisions $538,000 $800,000 2,000 12 Tax 900 1,400 15 600 Advisory $319,000 600 3 300 Totals $1,938,000 4,000 35 2,300
Transcribed Image Text:As the managing partner of Bramble Accounting Services (HAS), Adam is trying to compare the profitability results of the firm's three different business lines: Audit, Tax, and Advisory Services. These three operating divisions are supported by three support departments: Billing, Human Resources, and IT. The cost drivers (or allocation bases) for each of the support departments, along with each department's usage of those services and its own original costs, are as follows. Original cost Billing hours used Number of employees IT hours used Support Departments Billing $71,000 2 100 HR $116,000 2 200 IT $94,000 1 200 Audit Operating Divisions $538,000 $800,000 2,000 12 Tax 900 1,400 15 600 Advisory $319,000 600 3 300 Totals $1,938,000 4,000 35 2,300
The total revenue earned by each operating division is Audit, $847,000; Tax, $1,140,000; and Advisory, $584,000. Evaluate the profitability of each operating division, first using the costs from part (a) and then using the costs from part (b). Compare the gross margin percentages for each of these divisions to their profit margin percentages. (Round percentage answers to 1 decimal place, e.g. 15.2% and dollar answers to 2 decimal places, e.g. 15.25.) Gross margin Operating income $ Gross margin Operating income $ $ eTextbook and Media Show Transcribed Text $ $ 4 $ $ $ Scenario (a) Scenario (b) Tax Audit Tax Audit % $ The total revenue earned by each operating division is Audit, $847,000; Tax, $1,140,000; and Advisory, $584,000. Evaluate the profitability of each operating division, first using the costs from part (a) and then using the costs from part (b). Compare the gross margin percentages for each of these divisions to their profit margin percentages. (Round percentage answers to 1 decimal place, e.g. 15.2% and dollar answers to 2 decimal places, e.g. 15.25.) % $ % $ % % $ % $ % $ % $ $ Advisory Scenario (a) Advisory Scenario (b) Tax Tax % % ▸ % %
Transcribed Image Text:The total revenue earned by each operating division is Audit, $847,000; Tax, $1,140,000; and Advisory, $584,000. Evaluate the profitability of each operating division, first using the costs from part (a) and then using the costs from part (b). Compare the gross margin percentages for each of these divisions to their profit margin percentages. (Round percentage answers to 1 decimal place, e.g. 15.2% and dollar answers to 2 decimal places, e.g. 15.25.) Gross margin Operating income $ Gross margin Operating income $ $ eTextbook and Media Show Transcribed Text $ $ 4 $ $ $ Scenario (a) Scenario (b) Tax Audit Tax Audit % $ The total revenue earned by each operating division is Audit, $847,000; Tax, $1,140,000; and Advisory, $584,000. Evaluate the profitability of each operating division, first using the costs from part (a) and then using the costs from part (b). Compare the gross margin percentages for each of these divisions to their profit margin percentages. (Round percentage answers to 1 decimal place, e.g. 15.2% and dollar answers to 2 decimal places, e.g. 15.25.) % $ % $ % % $ % $ % $ % $ $ Advisory Scenario (a) Advisory Scenario (b) Tax Tax % % ▸ % %
Expert Solution
steps

Step by step

Solved in 4 steps with 4 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Segment Reporting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS