ACCT 212 Connect Homework 9 Responsibility Accounting Assignment solutions complete answers

ACCT 212 Connect Homework 9 Responsibility Accounting Assignment solutions complete answers 

 

Ana Perez is the plant manager of Travel Free’s Indiana plant. The Camper and Trailer operating departments manufacture products and have their own managers. The Office department, which Perez also manages, provides services equally to the two operating departments.
Each performance report includes only those costs that a particular operating department manager can control: direct materials, direct labor, supplies used, and utilities. The plant manager is responsible for the department managers’ salaries, building rent, office salaries other than her own, and other office costs plus all costs controlled by the two operating department managers.
The annual departmental budgets and actual costs for the two operating departments follow.

The Office department’s budgeted and actual costs follow.

Prepare responsibility accounting performance reports that list costs controlled by the following.

1. Manager of Camper department.
2. Manager of Trailer department.
3. Manager of Indiana plant.

 

Home Properties is developing a subdivision that includes 370 home lots. The 230 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 140 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $60,000 and for each Hilltop lot is $108,000. The developer acquired the land for $2,000,000 and spent another $2,100,000 on street and utilities improvements.
Assign the joint land and improvement costs of $4,100,000 to the Canyon section and the Hilltop section using the value basis of allocation. (Do not round your intermediate calculations.)

 

The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a market price of $97 each. Each trailer incurs $47 of variable manufacturing costs. The Trailer division has capacity for 23,000 trailers per year and has fixed costs of $600,000 per year.
1. Assume the Assembly division of Baxter Bicycles wants to buy 5,800 trailers per year from the Trailer division. If the Trailer division can sell all of the trailers it manufactures to outside customers (and has no excess capacity), what price should be used on transfers between divisions?
2. Assume the Trailer division currently only sells 9,700 trailers to outside customers and has excess capacity. The Assembly division wants to buy 5,800 trailers per year from the Trailer division. What is the range of acceptable prices on transfers between divisions?

 

A growing chain is trying to decide which store location to open. The first location (A) requires a $500,000 investment in average assets and is expected to yield annual income of $70,000. The second location (B) requires a $200,000 investment in average assets and is expected to yield annual income of $42,000.

 

The Ski department reports sales of $620,000 and cost of goods sold of $434,000. Its expenses follow.

 

Mia works in both the jewelry department and the cosmetics department of a retail store. She assists customers in both departments and organizes merchandise in both departments. The store allocates her wages between the two departments based on the time worked in the two departments in each two-week pay period. Mia reports the following hours and activities spent in the two departments in the most recent two weeks. Allocate Mia’s $1,920 of wages for two weeks to the two departments.

 

Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $25,000 and for Purchasing is $56,200. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders.

 

Arctica manufactures snowmobiles and ATVs. These products are made in different departments, and each department has its own manager. Each responsibility performance report includes only those costs that the department manager can control: direct materials, direct labor, supplies used, and utilities.

Prepare a responsibility accounting performance report for the snowmobile department. (Under budget amounts should be indicated by a minus sign.)

 

Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $26,700 and for Purchasing is $46,700. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders.
 

Department
Sales
Purchase Orders
Books
$ 180,400
1,290
Magazines
123,000
690
Newspapers
106,600
1,020
Total
$ 410,000
3,000
 
Allocate the expenses from (a) the Office and (b) Purchasing to each of the company’s three operating departments using the given information.

 

Mia works in both the jewelry department and the cosmetics department of a retail store. She assists customers in both departments and organizes merchandise in both departments. The store allocates her wages between the two departments based on the time worked in the two departments in each two-week pay period. Mia reports the following hours and activities spent in the two departments in the most recent two weeks. Allocate Mia’s $1,680 of wages for two weeks to the two departments.

 

Renata Company has four departments: Materials, Personnel, Manufacturing, and Packaging. Information follows.
 

Department
Employees
Square Feet
Asset Values
Materials
24
22,000
$ 6,100
Personnel
6
11,000
1,830
Manufacturing
48
55,000
36,600
Packaging
42
22,000
16,470
Total
120
110,000
$ 61,000
 
The four departments share the following indirect expenses for supervision, utilities, and insurance according to their allocation bases.
 

Indirect Expense
Cost
Allocation Base
Supervision
$ 82,600
Number of employees
Utilities
51,000
Square feet occupied
Insurance
23,000
Asset values
Total
$ 156,600
 
 
Allocate each of the three indirect expenses to the four departments.

 

Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss.
 

Departmental Income Statements
For Year Ended December 31
Acoustic
Electric
Sales
$ 102,700
$ 84,100
Cost of goods sold
45,275
47,550
Gross profit
57,425
36,550
Expenses
 
 
Advertising
4,985
4,340
Depreciation—Equipment
10,120
8,530
Salaries
19,900
17,400
Supplies used
2,030
1,730
Rent
7,045
6,010
Utilities
3,015
2,640
Total expenses
47,095
40,650
Income (loss)
$ 10,330
$ (4,100)
 
1. Prepare a departmental contribution to overhead report.
2. Based on contribution to overhead, should the electric guitar department be eliminated?

 

The Ski department reports sales of $610,000 and cost of goods sold of $427,000. Its expenses follow.
 

Direct expenses
Indirect expenses
Service department expenses
Salaries
$ 118,000
Rent
$ 17,500
Office
$ 25,800
Depreciation
50,000
 
 
 
 

1. For the Ski department only, prepare a departmental income statement.
2. & 3. For the Ski department only, prepare a departmental contribution to overhead report. Based on these two reports, should the Ski department be eliminated?

 

A growing chain is trying to decide which store location to open. The first location (A) requires a $500,000 investment in average assets and is expected to yield annual income of $85,000. The second location (B) requires a $200,000 investment in average assets and is expected to yield annual income of $44,000.

(1) Compute the expected return on investment for each location.
(2) Using return on investment, which location (A or B) should the company open?

 

Megamart provides the following information on its two investment centers.
 

Investment Center
Sales
Income
Average Assets
Electronics
$ 45,000,000
$ 3,420,000
$ 18,000,000
Sporting goods
25,200,000
2,520,000
14,000,000
1. Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income?
2. Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most residual income?
3. Assume the Electronics center is presented with a new investment opportunity that will yield a 15% return on investment. Should the new investment opportunity be accepted? The target return is 11%.

 

Compute profit margin and investment turnover for each center. Which center generates more income per dollar of sales? Which department is most efficient at generating sales from average invested assets?

 

A manufacturer reports the following for two of its divisions for a recent month.
 

 
Beverage Division
Cheese Division
Average assets
$ 8,800
$ 15,700
Sales
3,570
5,760
Income
942
1,370
For each division, compute:

1. return on investment.
2. profit margin.
3. investment turnover.

 

Assume that each of the company’s divisions has a target income at 7% of average assets. Compute residual income for each division.

 

The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a market price of $107 each. Each trailer incurs $49 of variable manufacturing costs. The Trailer division has capacity for 25,000 trailers per year and has fixed costs of $420,000 per year.
 
1. Assume the Assembly division of Baxter Bicycles wants to buy 5,900 trailers per year from the Trailer division. If the Trailer division can sell all of the trailers it manufactures to outside customers (and has no excess capacity), what price should be used on transfers between divisions?
2. Assume the Trailer division currently only sells 9,900 trailers to outside customers and has excess capacity. The Assembly division wants to buy 5,900 trailers per year from the Trailer division. What is the range of acceptable prices on transfers between divisions?

 

Home Properties is developing a subdivision that includes 500 home lots. The 180 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 320 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $50,000 and for each Hilltop lot is $106,000. The developer acquired the land for $1,500,000 and spent another $2,500,000 on street and utilities improvements.
 
Assign the joint land and improvement costs of $4,000,000 to the Canyon section and the Hilltop section using the value basis of allocation. (Do not round your intermediate calculations.)

 

A dairy company processed raw milk for $66,000. This raw milk can be converted into the following types of milk with listed sales values.
 

Joint Products
Sales Value
Whole milk
$ 31,000
2% milk
49,600
Skim milk
43,400
Total
$ 124,000

Use the sales value basis to (1) allocate the total cost of the raw milk to each type of milk and (2) determine the gross profit for each type of milk.

 

Ana Perez is the plant manager of Travel Free’s Indiana plant. The Camper and Trailer operating departments manufacture products and have their own managers. The Office department, which Perez also manages, provides services equally to the two operating departments.

Each performance report includes only those costs that a particular operating department manager can control: direct materials, direct labor, supplies used, and utilities. The plant manager is responsible for the department managers’ salaries, building rent, office salaries other than her own, and other office costs plus all costs controlled by the two operating department managers.

The annual departmental budgets and actual costs for the two operating departments follow.
 

For Year Ended December 31
Budget
Actual
Campers
Trailers
Campers
Trailers
Direct materials
$ 195,300
$ 275,600
$ 194,500
$ 273,000
Direct labor
104,300
206,000
106,600
206,800
Department manager salaries
43,500
52,200
44,700
53,000
Supplies used
3,400
9,100
3,700
8,500
Utilities
4,600
5,400
4,200
5,300
Building rent
5,400
9,900
5,800
8,700
Office department costs
70,750
70,750
81,550
81,550
Totals
$ 427,250
$ 628,950
$ 441,050
$ 636,850
 
The Office department’s budgeted and actual costs follow.
 

For Year Ended December 31
Budget
Actual
Plant manager salary
$ 80,000
$ 91,000
Other office salaries
40,500
25,100
Other office costs
21,000
47,000
Totals
$ 141,500
$ 163,100
 
Required:
Prepare responsibility accounting performance reports that list costs controlled by the following.
1. Manager of Camper department.
2. Manager of Trailer department.
3. Manager of Indiana plant.

 

Garcia Company has two operating departments (Phone and Earbuds) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses.
 

GARCIA COMPANY
Departmental Income Statements
For Year Ended December 31
 
Phone
Earbuds
Combined
Sales
$ 210,000
$ 95,000
$ 305,000
Cost of goods sold
102,900
58,900
161,800
Gross profit
107,100
36,100
143,200
Expenses
 
 
 
Sales salaries
21,000
6,900
27,900
Supplies used
1,200
300
1,500
Depreciation—Equipment
2,400
400
2,800
Rent
7,100
3,720
10,820
Utilities
2,300
2,500
4,800
Share of office department expenses
11,000
4,500
15,500
Total expenses
45,000
18,320
63,320
Income
$ 62,100
$ 17,780
$ 79,880

Required:
Prepare a departmental contribution to overhead report.

 

USA Airlines uses the following performance measures. Classify each performance measure into the most likely balanced scorecard perspective it relates to: customer, internal process, innovation and learning, or financial.

 

A manufacturer reports the data below.
 

 
Current Year
Prior Year
Accounts payable
$ 7,723
$ 11,668
Accounts receivable
26,605
17,862
Inventory
10,024
9,415
Net sales
175,000
125,000
Cost of goods sold
87,000
118,000

(1) Compute the number of days in the cash conversion cycle for each year.
(2) Did the company manage cash more effectively in the current year?