1. Carter Company reported the following financial numbers for one of its divisi

ID: 2467903 • Letter: 1

Question

1. Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Assume a target income of 10% of average invested assets. Compute residual income for the division:

a.$203,000.

b.$193,000.

c.$150,500.

d.$60,300.

e.$197,50

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for the four departments. Purchasing department expenses are allocated to the operating departments on the basis of purchase orders. Maintenance department expenses are allocated based on square footage.

Required: Compute the amount of Purchasing department expense to be allocated to Assembly.

$6,400.

$9,900.

$8,100.

$14,400.

$25,600.

3 ,Responsibility accounting performance reports:

a.Become more detailed at higher levels of management.

b.Are usually summarized at higher levels of management.

c.Are equally detailed at all levels of management.

d.Are useful in any format..

e.Are irrelevant at the highest level of management.

Allocating joint costs to products using a value basis method is based on their relative:

a.Sales values.

b.Direct costs.

c.Gross margins.

d.Total costs.

e.Variable costs.

Which of the following is not one of the perspectives used to analyze performance using the balanced scorecard?

a.Customer

b.Financial/owners

c.Internal process

d.Number of employees

e.Innovation and learning

Purchasing Maintenance Fabrication Assembly Operating costs $32,000 $18,000 $96,000 $62,000 No. of purchase orders 16 4 Sq. ft. of space 3,300 2,700

Explanation / Answer

Solution :

1..

sales

4525000

COGS

-2550000

1975000

operating expenses

-1372000

NET INCOME

603000

average invested assets.

4100000

target income 10%

410000

residual income

193000

(Net income - Target income)

2..

amount of Purchasing department expense to be allocated to Assembly

6400

(32000*4/20)

allocation ratio = 16:4

3 ,Responsibility accounting performance reports: Are usually summarized at higher levels of management.

4..Allocating joint costs to products using a value basis method is based on their relative: Sales value

5.. Which of the following is not one of the perspectives used to analyze performance using the balanced scorecard? Number of employees