Question : 81.Department A had gross profit sales of $20,000, contribution margin : 1169192

 

 

81.Department A had gross profit on sales of $20,000, contribution margin of $12,000, total direct expenses of $8,000, and total indirect expenses of $7,000. Department A has   

A. a net income from operations of $5,000.

 

B. a net income from operations of $4,000.

 

C. a net loss from operations of $4,000.

 

D. a net loss of $7,000.

 

 

 

82.The Whippleton Department had gross profit on sales of $120,000, contribution margin of $102,000, 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 $10,000.

 

 

 

83.Which of the following is usually not departmentalized?   

A. depreciation expense

 

B. interest expense

 

C. payroll taxes expense

 

D. rent expense

 

 

 

 

84.Semidirect and indirect expenses are treated the same for accounting purposes. At the end of the accounting period they are   

A. recorded by the department they relate to.

 

B. allocated.

 

C. charged to headquarters (corporate) general expenses.

 

D. treated as direct expenses.

 

 

 

 

85.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.

 

 

 

 

86.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

 

 

 

 

87.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

 

 

 

88.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

 

 

 

89.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.