Chapter 22: 2E (page 1016)
Refer to the information in Exercise 22-1 and prepare a responsibility accounting report for the ATV department.
The actual controllable cost is$2,080 higher than the budgeted controllable cost.
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Question: Classify each of the performance measures below into the most likely balanced scorecard perspective it relates to. Label your answers using C (customer), P (internal process), I (innovation and growth), or F (financial).
1. Customer wait time
2. Number of days of employee absences
3. Profit margin
4. Number of new products introduced
5. Change in market share
6. Employee sustainability training sessions attended
7. Length of time raw materials are in inventory
8. Customer satisfaction index
9. Gallons of water reused
10. CO2 emissions
In responsibility accounting, why are reports to higher-level managers usually summarized?
Jansen Company reports the following for its ski department for the year 2017. All of its costs are direct, except as noted.
Sales | \(605,000 |
Cost of goods sold | 425,000 |
Salaries | 112,000 (\)15,000 is indirect) |
Utilities | 14,000 (\(3,000 is indirect) |
Depreciation | 42,000 (\)10,000 is indirect) |
Office expenses | 20,000 (all direct) |
Prepare
(1) departmental income statement for 2017 and
(2) departmental contribution to overhead report for 2017.
(3) Based on these two performance reports, should Jansen eliminate the ski department?
Sadar Company operates a store with two departments: guitar and piano. Information about those departments follows.
Particular | Guitar department | Piano Department |
Sales | \(370,500 | \)279,500 |
Cost of goods sold | 320,000 | 175,000 |
Direct expenses | ||
Salaries | 35,000 | 25,000 |
Maintenance | 12,000 | 10,000 |
Utilities | 5,000 | 4,500 |
Insurance | 4,200 | 3,700 |
The company also incurred the following indirect costs.
Advertising | $15,000 |
Salaries | 27,000 |
Office expenses | 3,200 |
Indirect costs are allocated as follows: advertising on the basis of sales; salaries on the basis of number of employees; and office expenses on the basis of square footage. Additional information about the departments follows.
Department | Square footage | Number of employees |
Guitar | 5,000 | 3 |
Piano | 3,000 | 2 |
Required
1. For each department, determine the departmental contribution to overhead and the departmental net income.
2. Should the guitar department be eliminated? Explain.
Midwest Mfg. uses a balanced scorecard as part of its performance evaluation. The company wants to include information on its sustainability efforts in its balanced scorecard. For each of the sustainability items below, indicate the most likely balanced scorecard perspective it relates to. Label your answers using C (customer), P (internal process), I (innovation and learning), or F (financial).
1. CO2 emissions | 6. Pounds of trash diverted from landfill |
2. Number of solar panels installed | 7. Dollar sales of green products |
3. Gallons of water used | 8. Number of sustainability training workshops held |
4. Customer surveys of company’s sustainability reputation | 9. Cubic feet of natural gas used |
5. Pounds of recyclable packaging used | 10. Patents for green products applied for |
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