College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
22nd Edition
ISBN: 9781305666160
Author: James A. Heintz, Robert W. Parry
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 25, Problem 4SEA
ALLOCATING OPERATING EXPENSE—MILES DRIVEN Mercado Lopez owns a furniture store that offers free delivery of merchandise delivered within the local area.
Mileage records for the three sales departments are as follows:
The cost of using the truck for the last year, including
Allocate the cost of the truck among the three departments on the basis of miles driven.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Boston Home Center (BHC) offers customers the use of a truck at $44 per trip to take purchased merchandise home. BHC reports the following information about the trucks it has for customer usage:
Cost Driver Rate
Cost Driver Volume
Resources used
Operation
$ 0.55
per mile
45,400
miles
Administration
25.00
per trip
1,870
trips
Resources supplied
Operation
$ 35,000
Administration
$ 62,000
Required:
Compute the cost of unused operation and administration resource capacity for Boston Home Center.
unused resource capacity
operation
administration
Financial Accounting
Jackson County Senior Services is a nonprofit organization providing three services to seniors who live in their own homes-home
nursing, Meals on Wheels, and housekeeping. Revenue and expense data for the past year follow:
Revenues
Variable expenses
Contribution margin
Fixed expenses:
Depreciation
Liability insurance
Program administrators' salaries
General administrative overhead
Total fixed expenses
Net operating income (loss)
"Allocated on the basis of program revenues.
Meals on
Wheels
$ 408,000
Total
$925,000
Home Nursing
$ 264,000
473,000
117,000
452,000
147,000
203,000
205,000
Housekeeping
$ 253,000
153,000
100,000
69,700
9,000
40,300
20,400
43,700
20,300
8,000
15,400
115,400
40,500
38,300
36,600
185,000
52,800
81,600
50,600
413,800
122,600
168,200
123,000
$ 38,200
$ 24,400
$ 36,800
$ (23,000)
The head administrator of Jackson County Senior Services, Judith Miyama, is considering discontinuing the housekeeping program.
The depreciation in housekeeping is for a small van used to…
Chapter 25 Solutions
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Ch. 25 - A department that incurs costs and generates...Ch. 25 - Departmental gross profit is the difference...Ch. 25 - Prob. 3TFCh. 25 - Direct expenses are operating expenses incurred...Ch. 25 - Departmental direct operating margin is the...Ch. 25 - Prob. 1MCCh. 25 - The difference between a departments net sales and...Ch. 25 - Prob. 3MCCh. 25 - The difference between a departments gross profit...Ch. 25 - The difference between a departments gross profit...
Ch. 25 - Prob. 1CECh. 25 - Prob. 2CECh. 25 - Prob. 3CECh. 25 - Prob. 1RQCh. 25 - Prob. 2RQCh. 25 - Prob. 3RQCh. 25 - Prob. 4RQCh. 25 - Prob. 5RQCh. 25 - Prob. 6RQCh. 25 - Prob. 7RQCh. 25 - Prob. 8RQCh. 25 - Distinguish between departmental gross profit,...Ch. 25 - Prob. 10RQCh. 25 - GROSS PROFIT SECTION OF DE PART MENT AL INCO ME ST...Ch. 25 - ALLOCATING OPERATING EXPENSESQUARE FEET Weaverling...Ch. 25 - ALLOCATING OPERATING EXPENSERELATIVE NET SALES...Ch. 25 - ALLOCATING OPERATING EXPENSEMILES DRIVEN Mercado...Ch. 25 - COMPUTING OPERATING INCOME The sales, cost of...Ch. 25 - Prob. 6SEACh. 25 - INCOME STATEMENT WITH DEPART MENTAL GROSS PROFIT...Ch. 25 - INCOME STATE MENT WITH DEPARTMENTAL OPERATING...Ch. 25 - INCOME STATEMENT WITH DEPART MENTAL DIRECT...Ch. 25 - Prob. 10SPACh. 25 - GROSS PROFIT SECTION OF DEPART MENTAL INCOME...Ch. 25 - Prob. 2SEBCh. 25 - ALLOCATING OPERATING EXPENSERELATIVE NET SALES...Ch. 25 - ALLOCATING OPERATING EXPENSEMILES DRIVEN Herbert...Ch. 25 - Prob. 5SEBCh. 25 - Prob. 6SEBCh. 25 - INCOME STATEMENT WITH DEPART MENTAL GROSS PROFIT...Ch. 25 - Prob. 8SPBCh. 25 - Prob. 9SPBCh. 25 - Prob. 10SPBCh. 25 - Prob. 1MYWCh. 25 - Prob. 1ECCh. 25 - MASTERY PROBLEM Bobs Acme Supermarket has been in...Ch. 25 - CHALLENGE PROBLEM This problem challenges you to...
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
- ALLOCATING OPERATING EXPENSEMILES DRIVEN Herbert Quiong owns a furniture store that offers free delivery of merchandise delivered within the local area. Mileage records for the three sales departments are as follows: The cost of using the truck for the last year, including depreciation, was 5,000. Allocate the cost of the truck among the three departments on the basis of miles driven.arrow_forwardA company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950arrow_forwardSt. Johns Medical Center (SJMC) has five medical technicians who are responsible for conducting cardiac catheterization testing in SJMCs Cath Lab. Each technician is paid a salary of 36,000 and is capable of conducting 1,000 procedures per year. The cardiac catheterization equipment is one year old and was purchased for 250,000. It is expected to last five years. The equipments capacity is 25,000 procedures over its life. Depreciation is computed on a straight-line basis, with no salvage value expected. The reading of the catheterization results is conducted by an outside physician whose fee is 120 per test. The technicians report with the outside physicians note of results is sent to the referring physician. In addition to the salaries and equipment, SJMC spends 50,000 for supplies and other costs needed to operate the equipment (assuming 5,000 procedures are conducted). When SJMC purchased the equipment, it fully expected to perform 5,000 procedures per year. In fact, during its first year of operation, 5,000 procedures were run. However, a larger hospital has established a clinic in the city and will siphon off some of SJMCs business. During the coming years, SJMC expects to run only 4,200 cath procedures yearly. SJMC has been charging 850 for the procedureenough to cover the direct costs of the procedure plus an assignment of general overhead (e.g., depreciation on the hospital building, lighting and heating, and janitorial services). At the beginning of the second year, an HMO from a neighboring community approached SJMC and offered to send its clients to SJMC for cardiac catheterization provided that the charge per procedure would be 550. The HMO estimates that it can provide about 500 patients per year. The HMO has indicated that the arrangement is temporaryfor one year only. The HMO expects to have its own testing capabilities within one year. Required: 1. Classify the resources associated with the cardiac catheterization activity into one of the following: (1) committed resources, or (2) flexible resources. 2. Calculate the activity rate for the cardiac catheterization activity. Break the activity rate into fixed and variable components. Now, classify each activity resource as relevant or irrelevant with respect to the following alternatives: (1) accept the HMO offer, or (2) reject the HMO offer. Explain your reasoning. 3. Assume that SJMC will accept the HMO offer if it reduces the hospitals operating costs. Should the HMO offer be accepted? 4. Jerold Bosserman, SJMCs hospital controller, argued against accepting the HMOs offer. Instead, he argued that the hospital should be increasing the charge per procedure rather than accepting business that doesnt even cover full costs. He also was concerned about local physician reaction if word got out that the HMO was receiving procedures for 550. Discuss the merits of Jerolds position. Include in your discussion an assessment of the price increase that would be needed if the objective is to maintain total revenues from cardiac catheterizations experienced in the first year of operation. 5. Chandra Denton, SJMCs administrator, has been informed that one of the Cath Lab technicians is leaving for an opportunity at a larger hospital. She met with the other technicians, and they agreed to increase their hours to pick up the slack so that SJMC wont need to hire another technician. By working a couple hours extra every week, each remaining technician can perform 1,050 procedures per year. They agreed to do this for an increase in salary of 2,000 per year. How does this outcome affect the analysis of the HMO offer? 6. Assuming that SJMC wants to bring in the same revenues earned in the cardiac catheterization activitys first year less the reduction in resource spending attributable to using only four technicians, how much must SJMC charge for a procedure?arrow_forward
- sd subject-Accountingarrow_forwardA retailer pays $150,000 rent each year for its two-story building. Space in this building is occupied by five departments as shown here. Department Jewelry Cosmetics Department Housewares Tools Shoes First Floor Jewelry Department Cosmetics Department Totals The company allocates $97,500 of total rent expense to the first floor and $52,500 to the second floor. It then allocates rent expense for each floor to the departments on that floor based on square feet occupied. Determine the rent expense to be allocated to each department. Second Floor Housewares Department Square feet occupied 1,610 (first-floor) 2,990 (first-floor) Tools Department Shoes Department Totals Square feet occupied 2,070 (second-floor) 828 (second-floor 1,702 (second-floor) Square Feet 1.610 INN 2,990 14,600 Square Feet (1 2,070 828 1,702 14.600 Percent of Total % % HIIH 0% Percent of Total LLL % % % 0 % 201 Cost Allocated $ Cost Allocated 51 2012 277arrow_forwardA retailer pays $140,000 rent each year for its two-story building. Space in this building is occupied by five departments as shown here. Department Jewelry Cosmetics Department Housewares Tools Shoes First Floor Jewelry Department Cosmetics Department Totals The company allocates $84,000 of total rent expense to the first floor and $56,000 to the second floor. It then allocates rent expense for each floor to the departments on that floor based on square feet occupied. Determine the rent expense to be allocated to each department. Second Floor Housewares Department Square feet occupied 1,610 (first-floor) 2,990 (first-floor) Tools Department Shoes Department Totals Square feet occupied 1,932 (second-floor) 690 (second-floor) 1,978 (second-floor) Square Feet Square Feet 0 0 Percent of Total % % 0% Percent of Total % % 0 % Cost Allocated $ Cost Allocated $ 0 0arrow_forward
- Required information [The following information applies to the questions displayed below.] National Retail has two departments, Housewares and Sporting. Indirect expenses for the period follow. Rent Advertising Insurance Total The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $80,000 of indirect expenses by 4,000 square feet to find an average cost of $20 per square foot, and then allocated indirect expenses to each department based on the square feet it occupied. The company now wants to allocate indirect expenses using the allocation bases shown below. Department Housevares Sporting Total $ 45,000 25,000 10,000 $80,000 Square Feet 2,160 1,840 4,000 Housewares Sporting Allocate $45,000 of rent using square feet occupied Sales $ 190,000 310,000 $500,000 2. Allocate indirect expenses to the two departments. Rent expense is allocated based on square feet occupled. Advertising expense is allocated based on total sales. Insurance expense…arrow_forwardJackson County Senior Services is a nonprofit organization providing three services to seniors who live in their own homes-home nursing, Meals on Wheels, and housekeeping. Revenue and expense data for the past year follow: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) Meals on Wheels $ 407,000 Total $ 926,000 466,000 Home Nursing $ 268,000 111,000 Housekeeping $ 251,000 460,000 157,000 196,000 211,000 159,000 92,000 70,300 8,700 41,000 20,600 43,700 20,300 7,600 15,800 116,100 40,600 38,500 37,000 185,200 53,600 81,400 50,200 415,300 123,200 168,500 123,600 $ 44,700 $ 33,800 $ 42,500 $ (31,600) *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, is considering discontinuing the housekeeping program. The depreciation in housekeeping is for a small van used to…arrow_forwardBoston Home Center (BHC) offers customers the use of a truck at $64 per trip to take purchased merchandise home. BHC reports the following information about the trucks it has for customer usage: Cost Driver Rate Cost Driver Volume Resources used Operation $ 0.55 per mile 46,200 miles Administration 25.00 per trip 1,874 trips Resources supplied Operation $ 35,400 Administration $ 62,400 Sales revenue totaled $80,000. Required: Prepare a traditional income statement. Prepare an activity-based income statement. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a traditional income statement. Traditional Income Statement Sales revenue Operation costs Administration costs Operating profit Activity-Based Income Statement Resources Used Unused Resource Capacity…arrow_forward
- 3arrow_forwardJackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors-home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) Total $ 900,000 490,000 410,000 68,000 42,000 115,000 180,000 405,000 $ 5,000 Req 1A Home Nursing $ 260,000 120,000 140,000 Req 1B Req 2A Meals On Wheels $ 400,000 210,000 190,000 *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $5,000 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program. Required:…arrow_forwardJackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors-home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) Req 1A Total $ 930,000 481,000 449,000 Req 1B 69,800 42,700 Req 2A 113,800 186,000 412,300 $ 36,700 Req 2B Home Nursing $ 266,000 120,000 146,000 Complete this question by entering your answers in the tabs below. 8,500 20,300 40,100 53,200 122, 100 $ 23,900 Req 1A *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $36,700 to be unsatisfactory; therefore, she…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Fixed Asset Replacement Decision 1235; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=LJRzn9K8Nwk;License: Standard Youtube License