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Exam 25: Departmentalized Profit and Cost Centers

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Question 21

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Traditional financial statements may not contain adequate information for managing a business.

A) True
B) False

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Question 22

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A transfer price is

A) the price for which a company sells its products to customers.
B) the price at which goods are moved from one department of a company to another department of the company.
C) the basis on which indirect expenses are allocated.
D) the price at which a company purchases its products from a supplier.

E) A) and D)
F) A) and B)

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Question 23

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The amount of floor space occupied by each department is a common basis for allocating rent expense or utilities expense.

The difficulty of fairly allocating direct expenses is one limitation of departmental income statements.

The basic principle of ____________________ accounting is that management should be able to evaluate the performance of each segment of the business and pinpoint responsibility for its financial results.

Indirect expenses of the human resource department within a company might include:

Using the information provided,determine and present in good form,the Operating Revenue section of the Income Statement for Cody's Conundrums.

McKay Corporation has Sales of $147,500,Cost of Goods Sold of $70,200,Direct Expenses of $35,300,and Indirect Expenses of $30,000.What is McKay Corporation's Contribution Margin?

Floor space would be a reasonable basis for the allocation of

Managerial accounting is generally utilized to provide financial information about all of the following except

A systematic and logical way to allocate the rent expense for a building to various sales departments would be on the basis of ___________________.

When a business is organized into separate departments,it is necessary to provide accounting information about each department.

A department probably would be considered for elimination if it had

Office salaries expense should be allocated on the basis of total sales in each department.

The Copying Department occupied 9,000 square feet of space and the Printing Department occupied 6,000 square feet of space in the same building.If janitorial costs for the building were $12,000,then the amount that the Copying Department would be allocated for janitorial services would be ________________.

Which of the following enables management to evaluate the performance of each business segment?

Contribution margin figures are provided in traditional financial reports such as the Income Statement.

Which of the following is NOT a cost center?

Department A had total sales of $84,000 and Department B had total sales of $36,000.Other Office Expenses,totaling $2,500,are allocated on the basis of total sales.The amount allocated to Department B is

A company may have several cost centers,but it can have only one profit center.