Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 14, Problem 14.9Q
“Once a company allocates corporate costs to divisions, these costs should not be reallocated to the indirect-cost pools of the division.” Do you agree? Explain.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Sunk costs are ignored in decision making but information about sunk costs are usually found in the financial statements and accounting records. Opportunity costs however are not included in the financial statements of companies. Explain this.
The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:
Sales
Variable costs
Traceable fixed costs
Allocated common corporate costs
Net operating income (loss)
The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be
unaffected by this decision. Given these data, the elimination of the West Division would result in an overall company net operating income (loss) of:
Multiple Choice
O $91,900
O $(64,100)
$(142,000)
East
West
$603,000 $ 506,000
231,000 300,000
151,500 192,000
128,600
156,000
$ 91,900 $(142,000)
$(50,100)
A benefit of using a market-based transfer price is:
a. the economic viability and profitability of each division can be evaluated individually.
b. the profits of the transferring division are sacrificed for the overall good of the corporation.
c. the profits of the division receiving the products are sacrificed for the overall good of the corporation.
d. none of the abovee
Chapter 14 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 14 - Prob. 14.1QCh. 14 - Why is customer-profitability analysis an...Ch. 14 - Prob. 14.3QCh. 14 - A customer-profitability profile highlights those...Ch. 14 - Give examples of three different levels of costs...Ch. 14 - What information does the whale curve provide?Ch. 14 - A company should not allocate all of its corporate...Ch. 14 - What criteria might managers use to guide...Ch. 14 - Once a company allocates corporate costs to...Ch. 14 - A company should not allocate costs that are fixed...
Ch. 14 - How should a company decide on the number of cost...Ch. 14 - Show how managers can gain insight into the causes...Ch. 14 - How can the concept of a composite unit be used to...Ch. 14 - Explain why a favorable sales-quantity variance...Ch. 14 - How can the sales-quantity variance be decomposed...Ch. 14 - Flexible-budget variance, sales-quantity,...Ch. 14 - Sales-volume, sales-mix, and sales-quantity...Ch. 14 - Cost allocation in hospitals, alternative...Ch. 14 - Customer profitability, customer-cost hierarchy....Ch. 14 - Customer profitability, service company. Instant...Ch. 14 - Customer profitability, distribution. Best Drugs...Ch. 14 - Cost allocation and decision making. Reidland...Ch. 14 - Cost allocation to divisions. Rembrandt Hotel ...Ch. 14 - Cost allocation to divisions. Bergen Corporation...Ch. 14 - Prob. 14.25ECh. 14 - Variance analysis, working backward. The Hiro...Ch. 14 - Variance analysis, multiple products. Emcee Inc....Ch. 14 - Market-share and market-size variances...Ch. 14 - Click here to open your MyFinanceLab Study Plan...Ch. 14 - Customer profitability. Bracelet Delights is a new...Ch. 14 - Customer profitability, distribution. Green Paper...Ch. 14 - Customer profitability in a manufacturing firm....Ch. 14 - Customer-cost hierarchy, customer profitability....Ch. 14 - Allocation of corporate costs to divisions. Cathy...Ch. 14 - Cost allocation to divisions. Forber Bakery makes...Ch. 14 - Prob. 14.36PCh. 14 - Cost-hierarchy income statement and allocation of...Ch. 14 - Variance analysis, sales-mix and sales-quantity...Ch. 14 - Market-share and market-size variances...Ch. 14 - Variance analysis, multiple products. The Robins...Ch. 14 - Customer profitability and ethics. KC Corporation...
Knowledge Booster
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.Similar questions
- Are large or small companies more likely to use the reciprocal services method to allocate support department costs production department? Why?arrow_forwardIf the minimum transfer price of the selling division is less than the maximum transfer price of the buying division, the intermediate product should be transferred internally. Do you agree or disagree? Why?arrow_forwardWhich method is best suited to determine the value of a division orbusiness unit that is part of a larger company?arrow_forward
- Those costs which cannot be influenced by the action of a specified member of an enterprise is cafted? Select one: a. Non-controllable costs b. Relevant Costs C. All Costs d. Pre-determined costsarrow_forwardam. 155.arrow_forwardAssume that a company has decided not to allocate any support department costs to producing departments. Describe the likely behavior of the managers of the producing departments. Would this be good or bad? Explain why allocation would correct this type of behavior.arrow_forward
- Costs that can be eliminated in whole or in part if a particular business segment is discontinued are called: Multiple Choice sunk costs. opportunity costs. avoidable costs. irrelevant costs.arrow_forwardWhen a buying division purchases from outside supplier because the minimum transfer price is higher than their maximum transfer price, there is suboptimization, as the entire company could have benefited if the internal transfer occurs. True or Falsearrow_forward(d) If HHSB has acquired SSB, the supply of material from SSSB to HHSB will be at market price, rather than at full manufacturing cost, because the management believe it is better for divisional performance measurement purposes. State your opinion with THREE (3) reasons whether you agree or not with the transfer at market price. (i)arrow_forward
- Which is not a common method used to allocate costs under the departmental approach? Multiple Choice Step method. Reciprocal method. Dual method. Direct method.arrow_forward(d) If HHSB has acquired SSSB, the supply of material from SSSB to HHSB will be at market price, rather than at full manufacturing cost, because the management believe it is better for divisional performance measurement purposes.arrow_forward“All transfer-pricing methods give the same division operating income.” Do you agree? Explain.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
What is Cost Allocation? Definition & Process; Author: FloQast;https://www.youtube.com/watch?v=hLhvvHvZ3JM;License: Standard Youtube License