Question :
57. The Whippleton Department had gross profit sales of $120,000, contribution : 1197739
57. The Whippleton Department had gross profit on sales of $120,000, contribution margin of $60,000, total direct expenses of $18,000, and total indirect expenses of $52,000. The Whippleton Department has
A. a net income from operations of $42,000.
B. a net income from operations of $8,000.
C. a net income from operations of $50,000.
D. a net loss from operations of $10,000.
58. The contribution margin of a department is the difference between
A. its net sales and the total expenses.
B. its net sales and its cost of goods sold.
C. its gross profit on sales and its indirect expenses.
D. its gross profit on sales and its direct expenses.
59. Department B had net sales of $70,000, gross profit on sales of $35,000, total direct expenses of $9,000, and total indirect expenses of $6,000. Department B’s contribution margin is
A. $20,000.
B. $29,000.
C. $26,000.
D. $35,000.
60. Department B had net sales of $70,000, gross profit on sales of $35,000, total direct expenses of $9,000, and total indirect expenses of $6,000. Department B’s net income is
A. $20,000.
B. $29,000.
C. $26,000.
D. $35,000.
61. Which of the following is NOT a limitation to using departmental operating income?
A. It is difficult to determine each department’s fair share of semidirect and indirect expenses.
B. If one department is eliminated, many of the expenses allocated to it would continue.
C. Managers rely more on contribution per department than on income from operations.
D. It highlights the individual department’s financial information.
62. Prestige Corporation has Sales of $98,500, Indirect Expenses of $26,000, Direct Expenses of $62,400, and Cost of Goods Sold of $49,600. What is Prestige Corporation’s Contribution Margin?
A. $36,100
B. ($13,500)
C. ($39,500)
D. $48,900
63. McKay Corporation has Sales of $147,500, Cost of Goods Sold of $70,200, Direct Expenses of $35,300, and Indirect Expenses of $30,000. What is McKay Corporation’s Contribution Margin?
A. $77,300
B. $47,300
C. $42,000
D. $12,000
64. A department probably would be considered for elimination if it had
A. a positive contribution margin and a net income from operations.
B. a positive contribution margin and a net loss from operations.
C. a negative contribution margin and a net loss from operations.
D. a net loss, regardless of the contribution margin.
65. One department in a company had a contribution margin of $15,000 and a net loss from operations of $2,000. The indirect expenses allocated to this department would have been incurred whether or not the department existed. If this department had been eliminated, the company’s reported net income would have been
A. $2,000 higher.
B. $15,000 lower.
C. $13,000 lower.
D. the same with or without the department.
66. Department XYZ had sales of $90,000, direct expenses of $60,000 and indirect expenses of $50,000. The indirect expenses allocated to this department would have been incurred whether or not the department existed. If this department had been eliminated, the company’s reported net income would have been
A. $20,000 higher.
B. $30,000 higher.
C. $20,000 lower.
D. $30,000 lower.
67. Departmental income statements provide management with information necessary for decision-making. Which of the following is NOT a decision made possible by these statements?
A. where improvements in the profitable departments are needed
B. which departments to expand
C. whether or not to eliminate a department
D. what base to use to allocate costs
68. Cody Reese, manager of Cobra Sports, Ink, decided to eliminate its Division A. Division A had a contribution margin of $14,000 and a loss from operations of $2,500. What other information does Cody need to make the correct decision?
A. which direct expenses will still be incurred
B. the amount of Cost of Goods Sold
C. the Gross Profit on Sales
D. which of the indirect expenses will still be incurred
