Income statement : The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement. Service department charges : These are the indirect expenses incurred by profit center. These are charged for the services received by the department or division, based on the activity base of the service department. Profit margin : This ratio gauges the operating profitability by quantifying the amount of income earned from business operations from the sales generated. Formula of profit margin: Profit margin = Income from operations Sales To prepare : The income statements for N, S, and W Divisions of Company TR for the quarter ended December 31, 2016

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Answer 1

Question

Chapter 23, Problem 23.2BPR

(1)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Service department charges: These are the indirect expenses incurred by profit center. These are charged for the services received by the department or division, based on the activity base of the service department.

Profit margin: This ratio gauges the operating profitability by quantifying the amount of income earned from business operations from the sales generated.

Formula of profit margin:

Profit margin=Income from operationsSales

To prepare: The income statements for N, S, and W Divisions of Company TR for the quarter ended December 31, 2016

(2)

To determine

Profit margin and indicate the most profitable division.

(3)

To determine

To recommend: The chief executive officer to use better measure to evaluate the performance or profitability of the division.

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Answer 2

Question

Chapter 23, Problem 23.2BPR

(1)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Service department charges: These are the indirect expenses incurred by profit center. These are charged for the services received by the department or division, based on the activity base of the service department.

Profit margin: This ratio gauges the operating profitability by quantifying the amount of income earned from business operations from the sales generated.

Formula of profit margin:

Profit margin=Income from operationsSales

To prepare: The income statements for N, S, and W Divisions of Company TR for the quarter ended December 31, 2016

(2)

To determine

Profit margin and indicate the most profitable division.

(3)

To determine

To recommend: The chief executive officer to use better measure to evaluate the performance or profitability of the division.

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Answer 3

Question

Chapter 23, Problem 23.2BPR

(1)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Service department charges: These are the indirect expenses incurred by profit center. These are charged for the services received by the department or division, based on the activity base of the service department.

Profit margin: This ratio gauges the operating profitability by quantifying the amount of income earned from business operations from the sales generated.

Formula of profit margin:

Profit margin=Income from operationsSales

To prepare: The income statements for N, S, and W Divisions of Company TR for the quarter ended December 31, 2016

(2)

To determine

Profit margin and indicate the most profitable division.

(3)

To determine

To recommend: The chief executive officer to use better measure to evaluate the performance or profitability of the division.

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Answer 4

Question

Chapter 23, Problem 23.2BPR

(1)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Service department charges: These are the indirect expenses incurred by profit center. These are charged for the services received by the department or division, based on the activity base of the service department.

Profit margin: This ratio gauges the operating profitability by quantifying the amount of income earned from business operations from the sales generated.

Formula of profit margin:

Profit margin=Income from operationsSales

To prepare: The income statements for N, S, and W Divisions of Company TR for the quarter ended December 31, 2016

(2)

To determine

Profit margin and indicate the most profitable division.

(3)

To determine

To recommend: The chief executive officer to use better measure to evaluate the performance or profitability of the division.

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Answer 5

Chapter 23, Problem 23.2BPR

(1)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Service department charges: These are the indirect expenses incurred by profit center. These are charged for the services received by the department or division, based on the activity base of the service department.

Profit margin: This ratio gauges the operating profitability by quantifying the amount of income earned from business operations from the sales generated.

Formula of profit margin:

Profit margin=Income from operationsSales

To prepare: The income statements for N, S, and W Divisions of Company TR for the quarter ended December 31, 2016

(2)

To determine

Profit margin and indicate the most profitable division.

(3)

To determine

To recommend: The chief executive officer to use better measure to evaluate the performance or profitability of the division.

Answer 6

Chapter 23, Problem 23.2BPR

(1)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Service department charges: These are the indirect expenses incurred by profit center. These are charged for the services received by the department or division, based on the activity base of the service department.

Profit margin: This ratio gauges the operating profitability by quantifying the amount of income earned from business operations from the sales generated.

Formula of profit margin:

Profit margin=Income from operationsSales

To prepare: The income statements for N, S, and W Divisions of Company TR for the quarter ended December 31, 2016

Answer 7

Chapter 23, Problem 23.2BPR

(1)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Service department charges: These are the indirect expenses incurred by profit center. These are charged for the services received by the department or division, based on the activity base of the service department.

Profit margin: This ratio gauges the operating profitability by quantifying the amount of income earned from business operations from the sales generated.

Formula of profit margin:

Profit margin=Income from operationsSales

To prepare: The income statements for N, S, and W Divisions of Company TR for the quarter ended December 31, 2016

Answer 8

(2)

To determine

Profit margin and indicate the most profitable division.

Answer 9

(2)

To determine

Profit margin and indicate the most profitable division.

Answer 10

(3)

To determine

To recommend: The chief executive officer to use better measure to evaluate the performance or profitability of the division.

Answer 11

(3)

To determine

To recommend: The chief executive officer to use better measure to evaluate the performance or profitability of the division.

Answer 12

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Answer 13

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Answer 15

Ch. 23 - Prob. 1DQ Ch. 23 - Differentiate between a profit center and an...Ch. 23 - Weyerhaeuser developed a system that assigns...Ch. 23 - What is the major shortcoming of using income from...Ch. 23 - In a decentralized company in which the divisions...Ch. 23 - How does using the return on investment facilitate...Ch. 23 - Why would a firm use a balanced scorecard in...Ch. 23 - Prob. 8DQ Ch. 23 - When is the negotiated price approach preferred...Ch. 23 - When using the negotiated price approach to...

Solution Summary: The author explains how to prepare divisional income statements for N, S, and W Divisions of Company TR for the quarter ended December 31, 2016.

Profit margin and indicate the most profitable division.

To recommend: The chief executive officer to use better measure to evaluate the performance or profitability of the division.

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Chapter 23 Solutions