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 E, W, and C Divisions of Incorporation TR for the quarter ended December 31, 2016

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Question

Chapter 24, Problem 24.2APR

(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 E, W, and C Divisions of Incorporation 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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1. Stampede Company has two service departments — purchasing and maintenance, and two production departments — fabrication and assembly. The distribution of each service department's efforts to the other departments is shown below: FROM TO Purchasing Maintenance Fabrication Assembly Purchasing 0% 45% 45% 10% Maintenance 55% 0% 30% 15% The direct operating costs of the departments (including both variable and fixed costs) were as follows: Purchasing $ 138,000 Maintenance 60,000 Fabrication 114,000 Assembly 90,000 The total cost accumulated in the fabrication department using the direct method is: The answer is not 194100 2. Bifurcator Company produces three products — X, Y, and Z — from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were…

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Answer 2

Question

Chapter 24, Problem 24.2APR

(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 E, W, and C Divisions of Incorporation 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

Expert Solution & Answer

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Answer 3

Question

Chapter 24, Problem 24.2APR

(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 E, W, and C Divisions of Incorporation 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

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 24, Problem 24.2APR

(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 E, W, and C Divisions of Incorporation 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

Expert Solution & Answer

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Answer 5

Chapter 24, Problem 24.2APR

(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 E, W, and C Divisions of Incorporation 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 24, Problem 24.2APR

(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 E, W, and C Divisions of Incorporation TR for the quarter ended December 31, 2016

Answer 7

Chapter 24, Problem 24.2APR

(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 E, W, and C Divisions of Incorporation 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 14

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Answer 15

Ch. 24 - Differentiate between centralized and...Ch. 24 - Differentiate between a profit center and an...Ch. 24 - Prob. 3DQ Ch. 24 - What is the major shortcoming of using income from...Ch. 24 - In a decentralized company in which the divisions...Ch. 24 - How does using the return on investment facilitate...Ch. 24 - Why would a firm use a balanced scorecard in...Ch. 24 - What is the objective of transfer pricing?Ch. 24 - When is the negotiated price approach preferred...Ch. 24 - When using the negotiated price approach to...

Solution Summary: The author explains how to prepare income statements for E, W, and C Divisions of Incorporation TR for the quarter ended December 31, 2016.

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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 24 Solutions