Question :
24.3 Learning Objective 24-3
1) When preparing an income statement showing : 1177332
24.3 Learning Objective 24-3
1) When preparing an income statement showing departmental contribution margin:
A) indirect expenses are combined with direct expenses.
B) indirect departmental expenses are added to contribution margin.
C) direct expenses are subtracted from contribution margin on sales.
D) None of these answers are correct.
2) Compute the contribution margin for the video department, when gross profit is $880,000, direct expenses $370,000, and indirect expenses are $190,000.
A) $320,000
B) $690,000
C) $510,000
D) $700,000
3) 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. Direct expenses were $56,600 for the company and indirect expenses were $75,200. What was the contribution margin for the company?
A) $640,100
B) $583,500
C) $508,300
D) $564,900
4) A line on the income statement that indicates what a department has left after covering cost of goods and sold and direct expenses is:
A) the gross margin.
B) the net income.
C) the contribution margin.
D) None of these answers are correct.
5) What is the purpose for determining contribution margin?
A) To show the contribution by department toward covering indirect costs
B) To help determine whether or not to eliminate a department
C) To show the effect on net income each department
D) All of these answers are correct.
6) Supporters of the contribution margin approach believe that:
A) indirect expenses should be departmentalized.
B) indirect expenses should not be used for evaluating departmental performance.
C) indirect expenses are proportionally charged to each department.
D) direct expenses should not be used in evaluating departmental performance.
7) The cosmetic department experienced the following revenue and expenses during December:
Sales
$86,000
Cost of Goods Sold
29,000
Direct Operating Expenses
7,000
Indirect Operating Expenses
3,000
The cosmetic department’s contribution margin is:
A) $57,000.
B) $50,000.
C) $53,000.
D) $47,000.
8) On a departmental income statement, contribution margin minus total indirect expenses equals:
A) departmental contribution margin.
B) net income.
C) income before taxes.
D) income taxes.
9) 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.
10) The photography department in a department store experienced the following revenue and expenses during October:
Sales
$23,500
Cost of Goods Sold
8,200
Direct Operating Expenses
1,000
Indirect Operating Expenses
2,300
The photography department’s contribution margin is:
A) $15,300.
B) $20,200.
C) $13,000.
D) $14,300.
