Chapter 25 – Departmentalized Profit and Cost Centers
25–37
Chapter 25 – Departmentalized Profit and Cost Centers
25–39
Chapter 25 – Departmentalized Profit and Cost Centers
25–44
Bamboozle Solutions has two departments, A and B. The total indirect expenses by category
are given as are the Value of the Assets, Square Feet, and Sales for each department.
25–45
86. Based on the information given, determine the basis for the allocation (value of the assets
Equipment and Inventory; square feet of space; or sales) of each expense that will be allocated
to the departments.
87. Based on the information given, calculate the allocations for each of the indirect expenses
given based on their logical basis. (Keep two decimals in every percent calculation (i. e.,
25.65% or .2565 not 26%). Round final allocation amount to the nearest dollar.)
Chapter 25 – Departmentalized Profit and Cost Centers
25–46
25–47
25–49
89. Moriah’s Creations has two departments, Clothing and Fashion Accessories. The
following charge sales were made during the month of September. The Sales tax is 7%.
Complete the Sales Journal. Give a brief description of Lily Pad’s purchase.
Chapter 25 – Departmentalized Profit and Cost Centers
Matching Questions
90. Match the following terms with the definitions.
1. The process that allows management to evaluate the
performance of each segment of the business and
assign responsibility for its financial results
Indirect expenses
6
2. A business segment that produces revenue
Profit center
3
3. The branch of accounting that provides financial
information about business segments, activities, or
products
Direct expenses
7
4. Gross profit on sales minus direct expenses
Profit center
2
5. The price at which one segment’s goods are
transferred to another segment of the company
Departmental
income statement
10
6. Operating expenses that cannot be readily identified
and are not closely related to activity within a
department
Responsibility
accounting
1
7. Operating expenses that are identified directly with
a department and are recorded by department
Cost center
8
8. A business segment that incurs costs but does not
produce revenue
Transfer price
5
9. Operating expenses that cannot be directly assigned
to a department but are closely related to departmental
activities
Contribution
margin
4
10. Income statement that shows each department’s
contribution margin and net income from operations
after all expenses are allocated
Semidirect
expenses
9