1445
Exercise 24-12 (20 minutes)
(1)
Division
Operating
income
Average assets*
Return on
investment
(2)
Division
Operating
income
Sales
Profit margin
(3)
Division
Sales
Average assets*
Investment
turnover
Exercise 24-13 (10 minutes)
($ millions)
Beverage
Cheese
Operating income ……..
$349
$634
Target net income
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 24
1446
Exercise 24-14 (15 minutes)
Geographic segment
Operating
income
Sales
Profit margin
Exercise 24-15 (20 minutes)
1. Return on investment = $1,000,000/$12,500,000 = 8%
Exercise 24-16 (20 minutes)
1447
Exercise 24-17 (15 minutes)
Exercise 24-18 (15 minutes)
Part 1
Process time ……………………………………………………………………
6.0 days
0.8 days
Move time ………………………………………………………………………..
3.2 days
Wait time …………………………………………………………………………
Manufacturing cycle time …………………………………………………
Part 2
Manufacturing cycle efficiency (6.0 days/ 15.0 days) …………
Part 3
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Exercise 24-19 (15 minutes)
Part 1
Process time ……………………………………………………………………
16.0 hours
Move time ………………………………………………………………………..
Wait time …………………………………………………………………………
21.5 hours
Manufacturing cycle time …………………………………………………
50.0 hours
Part 2
Manufacturing cycle efficiency (16.0 hours/ 50.0 hours) ……
Part 3
To increase the manufacturing cycle efficiency to 0.80 Best Ink needs to
1449
Exercise 24-20B (15 minutes)
1. If the trailer division is currently operating at full capacity, its manager
2. If the trailer division is currently producing 20,000 trailers and the
3. The trailer division would prefer a transfer price of $140 per trailer, since
1450
Exercise 24–21C (20 minutes)
Preliminary calculations
Land cost ……………………………………………………….
$4,000,000
Improvements ……………………………………………………….
Total cost of lots ……………………………………………………
$7,500,000
Allocated cost—value basis of allocation: $7,500,000
Market
% of
Allocated
Average
Value
Total
Cost
Lot Cost
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Exercise 24-22C (25 minutes)
Preliminary calculations
Parts
Quantity*
Price
Total
Lobster tails ……………………..
1,248 lbs.
$26,208
Lobster flakes …………………..
7,392
Total market value …………….
$33,600
Allocated cost—value basis allocation: $12,600
Market
% of
Allocated
Cost
Parts
Value
Total
Cost
per lb.
Lobster tails ………………..
Lobster flakes ……………..
(1) Cost of goods sold
Parts
Quantity (given)
Cost
Total
(2) Cost of ending inventory
Parts
Quantity
Cost
Total
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Exercise 24-23 (20 minutes)
(1) Profit margin = Income/Sales
Division
Income*
Sales*
Profit margin
(2) Investment turnover = Sales/Average invested assets
Investment center
Sales*
Avg. assets*
Investment
turnover
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 24
1453
PROBLEM SET A
Problem 24-1A (50 minutes)
Part 1
a.
Responsibility Accounting Performance Report
Dept. Manager, Camper Department
For the Year
Budgeted
Actual
Over (Under)
Amount
Amount
Budget
Controllable Costs
b.
Responsibility Accounting Performance Report
Dept. Manager, Trailer Department
For the Year
Budgeted
Actual
Over (Under)
Amount
Amount
Budget
Controllable Costs
Raw materials …………………………..
$275,000
$273,200
$(1,800)
Employee wages ………………………..
Raw materials …………………………..
$195,000
$194,200
$ (800)
Employee wages …………………………
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Problem 24-1A (Continued)
c.
Responsibility Accounting Performance Report
Plant Manager, Indiana Plant
For the Year
Budgeted
Actual
Over (Under)
Amount
Amount
Budget
Controllable Costs
Dept. manager salaries …………….
$ 95,000
$ 97,500
$ 2,500
Camper department ………………….
Part 2
The plant manager did a better job of controlling costs and meeting the
1455
Problem 24-2A (60 minutes)
Part 1
Part 2
Market rates are used to allocate occupancy costs for depreciation,
interest, and taxes. Heating, lighting, and maintenance costs are allocated
1456
Problem 24-2A (Continued)
Value-based costs are allocated to departments in two steps
(i) Compute market value of each floor
Floor
Square
Footage
Value per
Sq. Ft.
Total
Total market value ……………..
(ii) Allocate $54,000 to each floor based on its percent of market value
Floor
Market
Value
% of
Total
Allocated
Cost
Cost per
Sq. Ft.
Totals …………………………..
We can then compute total allocation rates for the floors
Floor
Value
Usage
Total
These rates are applied to allocate occupancy costs to departments
Department
Square
Footage
Rate
Total
Part 3
A second-floor manager would prefer allocation based on market value. This is a
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Problem 24-3A (70 minutes)
Williams Company
Forecasted Departmental Income Statements
For Year Ended December 31, 2018
Clock
Mirror
Paintings
Combined
Sales ………………………………………..
(1)
Cost of goods sold ……………………
68,796
36,828
22,500
128,124
(2)
Gross profit ………………………………
Sales salaries ………………………….
20,000
7,000
8,000
35,000
Advertising ……………………………..
1,200
2,500
1,904
Depreciation of equipment ………
1,500
300
200
2,000
9,500
Allocated expenses
Rent expense ………………………….
5,616
2,835
2,349
10,800
(4)
Utilities expense ……………………..
2,080
4,000
(4)
12,364
5,236
4,400
22,000
(5)
Total allocated expenses …………
20,060
9,119
7,621
36,800
Total expenses ………………………….
43,732
17,351
17,121
78,204
Net income ……………………………….
Supporting Computations—coded (1) through (5) in statement above
Note 1 (Sales)
Clock
Mirror
Paintings
2017 sales …………………………………..
$130,000
$ 55,000
Note 2 (Cost of Goods Sold)
Clock
Mirror
Paintings
2017 cost of goods sold ……………….
$ 63,700
$ 34,100
$ 50,000
2017 cost of goods sold ……………….
$ 63,700
$ 34,100
2017 cost as % of sales………………..
2018 cost as % of sales ……………….
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Problem 24-3A (Continued)
Note 3 (Store Supplies Used)
Clock
Mirror
Paintings
2017 store supplies used ………………..
$ 900
$ 400
Growth rate (8% increase) ……………….
Clock
Mirror
Paintings
2017 rent ………………………………………..
$ 3,780
One-fifth from clock to paintings ……..
$ 1,404
paintings …………………………………………
Percent of total * …………………………..
Clock
2017 sales …………………………..………….
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Problem 22-4A (45 minutes)
Part 1
VORTEX COMPANY
Departmental Contribution Statements
Dept. A
Dept. B
Sales ………………………………….
$800,000
$450,000
Gross profit ……………………….
Salaries ……………………………..
88,000
Insurance …………………………..
14,000
Maintenance ………………………
Departmental contributions to
overhead ………………………….
Allocated indirect expenses
106,000
30,000
Salaries* …………………………….
23,040
12,960
Insurance** ………………………..
Depreciation*** …………………..
10,500
Total indirect expenses ………
*
Salaries allocation:
Sales
%
Amount
Allocated
Department A
$ 800,000
64%
$36,000
$23,040
Department B
36,000
Total
$1,250,000
100%
$36,000
Department A
Department B
Total
100%
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Problem 22-4A (Concluded)
****
Office expense allocation:
Employees
%
Amount
Allocated
Department A
75
60%
$50,000
$30,000
Department B
Part 2
Although Department B has a negative departmental income, it is
1461
P
Problem 24-5AC (60 minutes)
Part 1
Allocations of joint costs on the basis of sales values
Tree pruning and care: $405,000
Grade
Sales
Value
Percent
of Total
Allocated
Cost
No. 1 ………………………….
$450,000
48.0%
$194,400
No. 2 ………………………….
32.0
$937,500
$405,000
Picking, sorting, and grading: $202,500
Grade
Sales
Value
Percent
of Total
Allocated
Cost
No. 1 ………………………….
$450,000
48.0%
$ 97,200
No. 2 ………………………….
32.0
$937,500
$202,500
Grade
Value
of Total
Cost
No. 1 ………………………….
$450,000
60.0%
No. 2 ………………………….
40.0
No. 3 [identified] …………..
$750,000
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Problem 24-5AC (Continued)
Part 2
GEORGIA ORCHARDS
Income Statement
For Year Ended December 31, 2017
No. 1
No. 2
No. 3
Combined
Sales (by grade)
No. 1: 300,000 lbs. @ $1.50 …………
$450,000
$300,000
Total sales …………………………………
Part 3
Delivery costs include both crating and hauling costs. Georgia is able to
identify the portion of the cost directly related to the No. 3 peaches,