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Exam 24: Departmental Accounting

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Question 31

True/False

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When a company tracks gross profit by department, the sales journal has separate columns for Sales for each department.

A) True
B) False

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Question 32

Multiple Choice

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On a departmental income statement, sales less cost of goods sold and direct expenses equals:

A) gross margin.
B) income before taxes.
C) indirect expenses.
D) departmental contribution margin.

E) A) and C)
F) All of the above

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Question 33

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A company has four departments (A, B, C and D) and the net sales are $35,000; $40,000; $60,000 and $25,000 respectively. The cost of goods sold per department are $25,000; $15,000; $40,000 and $15,000 respectively. What department has the lowest gross profit?

Joyful Praises Corporation has total advertising expenses of $84,000: $32,000 for radio advertising and $52,000 for print advertising. The print advertising is allocated to Departments A and B based on net sales generated in each department. Department A has net sales of $558,000 and Department B has net sales of $186,000. How much of the print advertising should be allocated to Department A?

Which of the following indirect expenses would most likely be allocated on the basis of gross sales?

Which allocation base is best used to allocate building depreciation?

The PPC department of Ajax shows gross sales of $730,600 for computer supplies and $934,900 for office supplies. The cost of the computer supplies was $534,000 and the cost of the office supplies was $491,400. What is the gross profit for each category of the department respectively?

When a department showing a loss is eliminated, other departments will always achieve a greater contribution margin.

Which of the following would not be considered a direct expense?

The financial statement(s) that can be broken down by departments would be:

A company has three departments (A, B, and C) and the net sales are $350,000; $410,000; and $285,000 respectively. The cost of goods sold per department are $295,000; $360,000; and $225,000 respectively. What department has the highest gross profit?

From the following, calculate income by departments.

If the music department in a department store is 8,000 square feet and the total square feet is 40,000, how much of the total building cost of $40,000 will be allocated to music?

When preparing an income statement showing departmental contribution margin:

Indirect expenses are normally:

The difference between a department's gross profit and its operating expenses is known as the:

A net income would occur if the contribution margin is less than indirect expenses.

The photography department in a department store experienced the following revenue and expenses during October: The photography department's contribution margin is:

The following information is available for Charter Company: Complete the following chart to determine the total cost for each department, using the most appropriate method to apportion the indirect costs.

A maintenance department would be an example of a: