Ashvinbhai Required information[The following information applies to the questions displayed below.]Cranshaw Business Services (CBS) operates an information technology (IT) consulting firm out of two offices: Detroit andLos Angeles. Corporate services, such as legal, finance, and personnel, are centralized at the main office and the costs ofthese services are allocated to the two offices for the purposes of profitability assessment. The Detroit office is the originalunit of the company and is well established, having long-time clients from the automotive and other manufacturingindustries. The Los Angeles office is new with a smaller, much more varied, clientele. The costs of personnel services atCBS are currently allocated on the basis of the number of employees in each office. The annual costs of the personneldepartment total $520,000. Data for the fiscal year just ended show the following:Detroit Los AngelesNumber of employees346154Number of new hires919Number of employees departing111The manager of the Los Angeles office is now unhappy with the results of the controller's study. The manager asks the controller todevelop separate rates for fixed and variable costs in the Personnel Department. The controller reports back to the Los Angelesmanager that the costs would be as follows:Allocation based onEmployeesTransitionsVariable Cost$ 114,000111,000Fixed Cost$ 154,000141,000Total Cost$ 268,000252,000Required:a. The manager claims that the Los Angeles office should only be allocated the variable costs from this system, because the companywould have to pay the fixed costs even if the Los Angeles office did not exist. Compute the cost allocated to each unit using theapproach the Los Angeles manager prefers.DetriotLos AngelesTotal Allocated Cost

Cost allocation is the process of distributing expenses among different cost objects, such as…

Required: a. The manager claims that the Los Angeles office should only be allocated the variable costs from this system, because the company would have to pay the fixed costs even if the Los Angeles office did not exist. Compute the cost allocated to each unit using the approach the Los Angeles manager prefers. Detriot Los Angeles Total Allocated Cost

Required: a. The manager claims that the Los Angeles office should only be allocated the variable costs from this system, because the company would have to pay the fixed costs even if the Los Angeles office did not exist. Compute the cost allocated to each unit using the approach the Los Angeles manager prefers. Detriot Los Angeles Total Allocated Cost

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 1EB: For the following situations identify whether the description is a centralized or decentralized...

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Cranshaw Business Services (CBS) operates an information technology (IT) consulting firm out of two offices: Detroit and Los Angeles. Corporate services, such as legal, finance, and personnel, are centralized at the main office and the costs of these services are allocated to the two offices for the purposes of profitability assessment. The Detroit office is the original unit of the company and is well established, having long-time clients from the automotive and other manufacturing industries. The Los Angeles office is new with a smaller, much more varied, clientele. The costs of personnel services at CBS are currently allocated on the basis of the number of employees in each office. The annual costs of the personnel department total $370,000. Data for the fiscal year just ended show the following: Number of employees Number of new hires Number of employees departing Detroit Los Angeles 376 9 124 18 12 Required: a. Compute the cost allocated to each unit using the current allocation…
Cranshaw Business Services (CBS) operates an information technology (IT) consulting firm out of two offices: Detroit and Los Angeles. Corporate services, such as legal, finance, and personnel, are centralized at the main office and the costs of these services are allocated to the two offices for the purposes of profitability assessment. The Detroit office is the original unit of the company and is well established, having long-time clients from the automotive and other manufacturing industries. The Los Angeles office is new with a smaller, much more varied, clientele. The costs of personnel services at CBS are currently allocated on the basis of the number of employees in each office. The annual costs of the personnel department total $470,000. Data for the fiscal year just ended show the following: Number of employees Number of new hires Number of employees departing Allocation based on Employees Transitions Exercise 9-32 (Algo) Unitwide versus Department Allocation-Decision Making…
! Required information [The following information applies to the questions displayed below.] Cranshaw Business Services (CBS) operates an information technology (IT) consulting firm out of two offices: Detroit and Los Angeles. Corporate services, such as legal, finance, and personnel, are centralized at the main office and the costs of these services are allocated to the two offices for the purposes of profitability assessment. The Detroit office is the original unit of the company and is well established, having long-time clients from the automotive and other manufacturing industries. The Los Angeles office is new with a smaller, much more varied, clientele. The costs of personnel services at CBS are currently allocated on the basis of the number of employees in each office. The annual costs of the personnel department total $440,000. Data for the fiscal year just ended show the following: Number of employees Number of new hires Number of employees departing a. Using current…
Cranshaw Business Services (CBS) operates an information technology (IT) consulting firm out of two offices: Detroit and Los Angeles. Corporate services, such as legal, finance, and personnel, are centralized at the main office and the costs of these services are allocated to the two offices for the purposes of profitability assessment. The Detroit office is the original unit of the company and is well established, having long-time clients from the automotive and other manufacturing industries. The Los Angeles office is new with a smaller, much more varied, clientele. The costs of personnel services at CBS are currently allocated on the basis of the number of employees in each office. The annual costs of the personnel department total $350,000. Data for the fiscal year just ended show the following: Detroit Los Angeles Number of employees 380 120 Number of new hires 7 20 Number of employees departing 3 10 Exercise 9-31 (Static) Unitwide versus Department…
Cranshaw Business Services (CBS) operates an information technology (IT) consulting firm out of two offices: Detroit and Los Angeles. Corporate services, such as legal, finance, and personnel, are centralized at the main office and the costs of these services are allocated to the two offices for the purposes of profitability assessment. The Detroit office is the original unit of the company and is well established, having long-time clients from the automotive and other manufacturing industries. The Los Angeles office is new with a smaller, much more varied, clientele. The costs of personnel services at CBS are currently allocated on the basis of the number of employees in each office. The annual costs of the personnel department total $550,000. Data for the fiscal year just ended show the following: Number of employees Number of new hires Number of employees departing Allocation based on Employees Transitions Detroit 340 Variable Cost $ 120,000 120,000 9 1 Los Angeles 160 Exercise 9-32…
Cranshaw Business Services (CBS) operates an information technology (IT) consulting firm out of two offices: Detroit and Los Angeles. Corporate services, such as legal, finance, and personnel, are centralized at the main office and the costs of these services are allocated to the two offices for the purposes of profitability assessment. The Detroit office is the original unit of the company and is well established, having long-time clients from the automotive and other manufacturing industries. The Los Angeles office is new with a smaller, much more varied, clientele. The costs of personnel services at CBS are currently allocated on the basis of the number of employees in each office. The annual costs of the personnel department total $550,000. Data for the fiscal year just ended show the following: Number of employees Number of new hires Number of employees departing Detroit 340 Required: 9 1 Los Angeles 160 20 10 Exercise 9-31 (Algo) Unitwide versus Department…
For the following situations, identify whether the description is probably a centralized or decentralized organization. A. Seaside Furniture, a small builder of side tables managed solely by its sole proprietor B. Harbor Marketing, which wants Advertising Team Leaders to be able to respond quickly to needs of potential clients so Team Leaders have the authority to make decisions about advertising and pricing C. Coutures Creations, with a single owner who manages the production, accounting, engineering, sales, and other administrative functions D. British Navy E. McDonalds franchise #3101 in Canton. Ohio F. United States Army
Manning Systems is a commercial software vendor that sells billing and other financial software to companies around the globe. Manning operates a centralized call center for customer support calls. Costs associated with use of the center are charged to the division with primary responsibility for the client. There are four geographical divisions: North America (NA), Central and South America (SA), Europe, and Asia-Pacific (APAC). The allocation is based on the length of time of calls made (Minutes). Idle time of the reservation agents and the fixed cost of the equipment are allocated based on the number of calls received (Calls) from clients in each division. Due to recent increased competition in the commercial software business, Manning has decided that it is necessary to better allocate its costs in order to price its services competitively and profitably. During the most recent period for which data are available, the use of the call center for each division was as follows:…
UrLink Company is a newly formed company specializing in high-speed Internet service for home and business. The owner, Lenny Kirkland, had divided the company into two segments: Home Internet Service and Business Internet Service. Each segment is run by its own supervisor, while basic selling and administrative services are shared by both segments.Lenny has asked you to help him create a performance reporting system that will allow him to measure each segment’s performance in terms of its profitability. To that end, the following information has been collected on the Home Internet Service segment for the first quarter of 2017. Budgeted Actual Service revenue $24,800 $25,000 Allocated portion of: Building depreciation 10,300 10,300 Advertising 4,700 4,200 Billing 3,200 3,200 Property taxes 1,100 1,200 Material and supplies 1,400 1,300 Supervisory salaries 9,400 9,400 Insurance 4,300 3,200 Wages…
You firm has just been hired by Toes in the Water, Inc., a manufacturer of kayaks, to provide consulting services. Toes in the Water operates two divisions: Ocean and Lake. Each divisional vice president is held responsible for both profit and invested capital. Each division consists of two branches: Sand and Clay. Each branch manager is responsible for generating revenue and controlling costs. The Ocean division's Sand branch has two departments, Zac and Brown. Both department managers are responsible for controlling costs. You asked a staff member to provide a list of the performance evaulation tools they would suggest using to evaluate the Sand and Clay branches. They provided the following list: budget versus actual report • segmented income statement • return on investment Do you agree with the staff member's list? Why or why not? A. No. Return on investment should not be used because the branches are considered profit centers. B. Yes. All of the tools listed are valid performance…
Exercise 9-31 and 9-32 (Static) [The following information applies to the questions displayed below.] Cranshaw Business Services (CBS) operates an information technology (IT) consulting firm out of two offices: Detroit and Los Angeles. Corporate services, such as legal, finance, and personnel, are centralized at the main office and the costs of these services are allocated to the two offices for the purposes of profitability assessment. The Detroit office is the original unit of the company and is well established, having long-time clients from the automotive and other manufacturing industries. The Los Angeles office is new with a smaller, much more varied, clientele. The costs of personnel services at CBS are currently allocated on the basis of the number of employees in each office. The annual costs of the personnel department total $350,000. Data for the fiscal year just ended show the following: Detroit Los Angeles Number of employees 380 120 Number of new hires 7 20…
Outsourcing Call Centers; Strategy; Ethics; Present-Value Analysis (Chapter 12) Merchants’Bank (MB) is a large regional bank operating in 634 locations in the southeastern United States.Until 2014, the bank operated a call center for customer inquiries out of a single location in Atlanta,Georgia. MB understood the importance of the call center for overall customer satisfaction andmade sure that the center was managed effectively. However, in early 2013, it became clear that thecost of running the center was increasing very rapidly, along with the firm’s growth, and that someissues were arising about the quality of the service. To improve the quality and dramatically reducethe cost of the service, MB moved its call center to Bangalore, India, to be run by an experiencedoutsourcing firm, Naftel, which offers similar services to other banks like MB.The Naftel contract was for 5 years, and in late 2017 it was time to consider whether to renewthe contract, change to another call center…