Managerial Accounts

Chapter 1 2 Fespons oilrty AccoLLrlrng Cualrty lontr-ol and Ervironmeltal Cost [Vara.]einent

I.ackax anna (lttl:r.nLtn itr' (iollege iras three- dil isions; [ -iberal Afis. Scie ltces. ancl l]usine ss i\drn inistralion. 1he r:ollegc's ootrpltoller is ir.ving to dc'cidc hou'to allocate Lhe costs of'rhe ,\rhnissislrs Dcparlment. the Reeistl'ar's l)cpal1nrent. and thc Conrputer Seniees l)cpafimenl. -[hc comptrolle-r has conrpilcil the fb1- Iolr.ing data lbr thc -r.car.just cnded.

Departm8nt Annual Cmt

$ 90,000 1 50,000

320,000

Admissrons

Regislrar

Planned Courses Requiring Gomputer Work

Exercise 12-32 Cost Allocaiion in a Colltge

Exercise't2-33 Seomented lncome

Statement, W Cable

Computer Services ..

Division

Liberal Afts

ilr.l0

7ItC

i.: i;

"r:,,

30 000

2E :ril0

22,OCC

12

?4

24

Sciences

Business Administration ........,..

Required:

Count-\\\'idc C'able Services. ltrc. is orgauized u,ilh thrce sc'gnronts: N4ctro. Suburban. ancl Outlring Data ior thcsc segmenls firr thc _'''ear.just enilecl tirllolv.

l. For each clcpartrretti. choose an allocation base and distrihute thc depitrtmental cosls to the collegc's tlrree division-r. Justill'1,orir choice oi'an allocalion base.

2. \\iruldIotrhlvcPrel'erredaili1l'crentallocationbasethanthoseavailableusingtheriatacornpilel bl thc conrpLroiler'l \\'h).1,

3' (lonstruct arl E,xcel spreaclshect lo soir'e retluircrnerrt ( I ) aboyc. Shoty hoq, the soh-rtion uill changc if the lbllorving inlbnration changes: thc costs incurretl by.the clepart- lncrrls \\'cre li120.000. lli160.000. and $360.000. ibr Admissions. Iiegistrar. arld alomputer Sen,ices. respectivel),.

senricr rerreirrre $l 000,tu0 $g00 0t_10 i;arabl; erpenses 200.00i 1 i0.ll0Lr Coittt'oilabi: fixed expe nsls 400,C0C 32r,r.00i1 F,reti e rJ,]erse-r.lfiroliellle [:,r,olhers .. 230 i.l0 20C.,.00

ln acldition to th!- e\pensts listed abovc" the coirpanl' Itas $9-r.000 ol cortrnr96 liretj lnconrc-tar expense Ibr the -i,car is $ l-15"000.

Required:

Company

$400 000

I00,000

I 50,000

98 000

cxpcnses.

l. Prepare a segmented income staternent 1br Couirtvuide Cai;le Seniccs. Inc. Use tire contr-ihution ibrruat.

2, Construct an Excel spreadsheet to solve the preceding rer-luirement. Shol htxr the solution r.rill change ilthe lblioriing inlbmraLion changes: the salcs revenlles \\crc $950.000 and !i8 I 5.000 lbr Vletro and Suburban. respcctivell,.

'Ihe fbllixving costs were incurred by Osaka i\4etals Comparw to inainl.ain the qualitv of its products. ()'br is tlre national cun'enc)' o{'.lapan.)

1. Opcrating an X-ra.r,ntachine to detect lirultl.uelds. I I0.lj00 r.er 2. ltcpairs olproducts sold last 1,.ear. I I 5.000,r,e n 3. Clost o1'req,eldin-s laulty joinls. Ii .000 r,en 1. Cost olsending nlacl.iine operators to a three-rveek training prograrr so lhe\,coullj learn to use ne\v

production ercluiprtent ri.ith a lou.er.r1efbct ratc. 1ti.I00-r.en

Required: Cllassili each o1'these costs as a prevention, appraisal. internal lailure. or ertemal laih-rrc c0st.

Exercise 1 2-34 Quality Costs