ACCT321 quiz 3

"JRTC is evaluating results for three separate business segments under his control. Selected financial information for each segment follows:

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Sales Operating Income Average Assets

Segment A $20,00,000 $1,00,000 $25,00,000

Segment B 35,00,000 4,50,000 60,00,000

Segment C 16,00,000 1,60,000 21,00,000

Rank order the three segments based on "margin," "turnover," and "return on investment." How is it possible that the rankings differ based on which evaluative model is used?

Problem 2

"Jiffy Print is a retailer of printers and ink cartridges. The printers carry a low profit margin and the ink cartridges a very high margin. Following is an aggregated budgeted performance plan for 2015.

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"Budgeted Performance Report

All Stores

For the Year Ending December 31, 2015"

Sales

Printers $45,00,000

Cartridges 45,00,000

Total sales $90,00,000

Less: Variable expenses

Printers $40,00,000

Cartridges 15,00,000

Total variable expenses $55,00,000

Contribution margin $35,00,000

Traceable fixed costs 15,50,000

Location margin $19,50,000

Common fixed costs 14,00,000

Stores margin $5,50,000

"Although total sales met expectations for the year, management is upset that the targeted margins were not achieved. Following is the ""store by store"" actual performance report. Evaluate the detailed data and write a paragraph explaining the loss. If each store has a positive margin, as shown in the following report, why is management upset? (Response should be less than 75 words long)

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"Actual Performance Report

All Stores

For the Year Ending December 31, 2015"

Store A Store B Store C

Sales

Printers $20,00,000 $25,00,000 $10,00,000

Cartridges 5,00,000 20,00,000 10,00,000

Total sales $25,00,000 $45,00,000 $20,00,000

Less: Variable expenses

Printers $17,77,778 $22,22,222 $8,88,889

Cartridges 1,66,667 6,66,667 3,33,333

Total variable expenses $19,44,444 $28,88,889 $12,22,222

Contribution margin $5,55,556 $16,11,111 $7,77,778

Traceable fixed costs 4,50,000 6,00,000 5,00,000

Location margin $1,05,556 $10,11,111 $2,77,778

Problem 3

Hardee's Publishing's four productive units are supported by three service departments: Maintenance, Food services, and Information technology. Maintenance costs are allocated to other units based on square footage, food services costs are allocated to other units based on number of employees, and information technology costs are allocated to other units based on number of PCs in use.

Below is a listing of data for each unit:

Square Footage Employees PCs in Use Direct Costs

Design 2,400 4 6 $4,00,000

Printing6,000 8 9 18,00,000

Binding3,000 3 2 6,50,000

Warehousing 9,000 3 3 1,80,000

Maintenance 1,000 4 1 2,25,000

Food services 3,000 2 1 2,60,000

Information technology 1,000 3 6 1,90,000

"Prepare a cost allocation of his or her costs to other units using both the direct and step allocation approach. It is agreed that the step allocations would occur in the following order: (a) Maintenance, (b) Food services, and (c) Information technology.

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Problem 2