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1463
Problem 24-1B (50 minutes)
Part 1
a.
Responsibility Accounting Performance Report
Dept. Manager, Refrigerator Department
For the Month of April
Budgeted
Actual
Over (Under)
Amount
Amount
Budget
Controllable Costs
Raw materials ................................
$400,000
$385,000
$(15,000)
b.
Responsibility Accounting Performance Report
Dept. Manager, Dishwasher Department
For the Month of April
Budgeted
Actual
Over (Under)
Amount
Amount
Budget
Controllable Costs
Raw materials ................................
$200,000
$202,000
$ 2,000
1464
Problem 24-1B (Continued)
c.
Responsibility Accounting Performance Report
Plant Manager, Chicago Plant
For the Month of April
Budgeted
Actual
Over (Under)
Amount
Amount
Budget
Controllable Costs
Dept. manager salaries .........
$ 104,000
$ 101,500
$ (2,500)
Part 2
The refrigerator department manager did a good job of controlling costs
1465
Problem 24-2B (60 minutes)
Part 1
Part 2
Market rates are used to allocate occupancy costs for the building rent.
Lighting and cleaning costs are allocated to the departments on all three
floors at the average rate per square foot. Costs assigned to each class are:
Occupancy Costs
Total
Costs
Value-Based
Costs
Usage-Based
Costs
Value-based costs are allocated in two steps
(i) Compute market value of each floor
Floor
Square
Footage
Value per
Sq. Ft.
Total
1466
Problem 24-2B (Continued)
(ii) Allocate the $400,000 to each floor based on its percent of market value
Floor
Market
Value
% of
Total
Allocated
Cost
Cost per
Sq. Ft.
First floor ................................
$300,000
60%
$240,000
$32.00
Total allocation rates for the departments on all three floors are
Floor
Value
Usage
Total
These rates are applied to allocate occupancy costs to Style’s department:
Department
Square
Footage
Rate
Total
Part 3
A basement manager would prefer the allocation based on market value. This
1467
Problem 24-3B (70 minutes)
BONANZA ENTERTAINMENT
Forecasted Departmental Income Statements
For Year Ended December 31, 2018
Movies
Video
Games
Compact
Discs
Combined
Sales ...............................................
$648,000
$216,000
$300,000
$1,164,000
(1)
Store supplies used .....................
4,320
1,080
2,000
7,400
(3)
Supporting Computations—coded (1) through (5) in statement above
Note 1 (Sales)
Movies
Video
Games
Compact
Discs
Note 2 (Cost of Goods Sold)
Movies
Video
Games
Compact
Discs
2017 cost of goods sold ..............
$420,000
$154,000
1468
Problem 24-3B (Continued)
Note 3 (Store Supplies Used)
Movies
Video
Games
Compact
Discs
2017 store supplies used ...........
$ 4,000
$ 1,000
Note 4 (Rent and Utilities)
Movies
Video
Games
Compact
Discs
2017 rent ......................................
$41,000
$ 9,000
Note 5 (Office Department Expenses)
Movies
Video
Games
Compact
Discs
2018 sales ....................................
$648,000
$216,000
$300,000
1469
Problem 24-4B (45 minutes)
Part 1
SADAR COMPANY
Departmental Contribution Statements
Guitars
Pianos
Sales ........................................
$370,500
$279,500
Departmental contributions to
overhead ...............................
Allocated indirect expenses
(5,700)
61,300
Advertising* ............................
8,550
6,450
*
Advertising allocation:
Sales
%
Amount
Allocated
Guitars
$370,500
57%
$15,000
$ 8,550
1470
Problem 22-4B (Concluded)
Part 2
The guitar department has both a negative contribution to overhead and a
1471
Problem 24-5BC (60 minutes)
Part 1
Allocations of joint cost on the basis of sales values
Land preparation, seeding, and cultivating: $700,000
Grade
Sales
Value
Percent of
Total
Allocated
Cost
No. 1 ...............................
$ 900,000
62.5%
$437,500
Harvesting, sorting, and grading: $40,000
Grade
Sales
Value
Percent
of Total
Allocated
Cost
No. 1 ...............................
$ 900,000
62.5%
$ 25,000
Delivery: $17,000 to Grade Nos. 1 & 2
Grade
Sales
Value
Percent
of Total
Allocated
Cost
No. 1 ...............................
$ 900,000
64.3%
$10,931
1472
Problem 24-5BC (Continued)
Part 2
RITA AND RICK REDDING
Income Statement
For Year Ended December 31, 2017
No. 1
No. 2
No. 3
Combined
Sales (by grade)
No. 1: 500,000 lbs. @ $1.80 ..........
$900,000
Costs
Land preparation, seeding,
and cultivating ............................
437,500
242,900
19,600
700,000
Part 3
Delivery costs include both crating and hauling costs. The Reddings are
able to identify the portion of the cost directly related to the No. 3
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 24
1473
SERIAL PROBLEM — SP 24
Serial Problem, Business Solutions (20 minutes)
1. The balanced scorecard is a system of performance measures that
requires managers to think of their company from four perspectives:
Customer, internal process, innovation and learning, and financial.
2. Below are some examples of balanced scorecard measures that
Santana could use. Other examples are possible:
Customer: Percentage of computer workstations returned, number of
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 24
1474
Reporting in Action — BTN 24-1
1. Apple revenues by product line
($ in millions)
September
26, 2015
September
27, 2014
September
28, 2013
Total revenues .............................................
$233,715
$182,795
$170,910
2. Apple can divide up the operating expenses into product line direct and
indirect expenses. Some of the direct expenses of a particular product
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 24
1475
Comparative Analysis — BTN 24-2
($ in millions)
1. Profit margin = Net income/Sales
2. Investment turnover = Investment center sales
Investment center average assets
3. Apple’s profit margin (22.8%) is higher than Google’s (21.8%).
Therefore, for every dollar of sales, Apple receives more profit. Also,
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 24
1476
Ethics Challenge — BTN 24-3
1. There is an ethical concern in this situation. Pincus is taking actions
he would not otherwise take. He believes that “minor compromises” in
his behavior do not significantly affect clients. However, the problem is
2. Given that Pincus is aware of his behavior, its potential consequences,
and the source of what’s behind his behavior (in this case the focus by
management on meeting the quarterly responsibility performance
3. Super Security (the employer) is ultimately responsible for any action
taken by its employees, including Pincus. Management must establish
an ethical code of conduct to ensure that department managers do not
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 24
Communicating in Practice — BTN 24-4
Sample solution
MEMORANDUM
TO: Name, Store Manager
FROM: Your Name, National Office Manager
SUBJECT: New Performance Reporting
DATE: Current Date
Taking It to the Net — BTN 24-5
Instructor note: The objective of this assignment is for students to be exposed to the
different accounting and business applications with spreadsheets.
1. The tutorials identified and read by the students will vary. For example,
2. Student responses regarding the usefulness of spreadsheets will
depend on the tutorials accessed. For example, the tutorial “ROI and
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 24
1478
Teamwork in Action — BTN 24-6
Instructor note: Student answers will vary. The key is to look for clear organizational
structure and sound thinking in designing performance reports.
1. The student must make decisions about geographic area, type of
business segment, and reporting structure. The objective is to have
them think about the many different ways a business can set up
2. Having comparable responsibility accounting reports is necessary to
reliably compare performance within a company (and across different
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 24
1479
Entrepreneurial Decision — BTN 24-7
1. Departmental income statements can be prepared for each department
once expenses have been allocated to it. The expenses will include both
2. If the indirect expenses are a large portion of total expenses, a
departmental income statement might not be the best measure of each
3. Ministry of Supply could use ratings from customer satisfaction
surveys, the number of repeat customers, the percentage of orders
Hitting the Road — BTN 24-8
1. [Student answers will vary for part (1).] One suggested responsibility
accounting reporting framework is to have (1) concessions and (2)
2. One suggested proposal is
Expense
Allocation Basis
Heat ...............................
Square footage occupied
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 24
1480
Global Decision — BTN 24-9
1. Net sales percentage growth [non-percents in ₩ millions]
Segment
Net sales % change from 2014 to 2015
2. Sales declined for both product lines, with the IT and mobile
3. The IT and mobile communications segment earned more operating
4. Samsung’s management can use this information to help establish
long-term goals and strategies and for resource allocation decisions.
line expansions and cost allocation decisions.
