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32. The following are condensed deparmental income statements for the Eastern and Western Regions of a chain of convenience stores: Net sales Cost of goods
32. The following are condensed deparmental income statements for the Eastern and Western Regions of a chain of convenience stores: Net sales Cost of goods sold Gross profit Total direct expenses Departmental contribution to overhead Total allocated indirect expenses Operating income (loss) Eastern Region Western Region $119,500 $71,700 73,800 43,800 45,700 27,900 15,100 7,300 30,600 20,600 31,600 18,100 ($1,000) $2,500 Based upon analysis of the departmental income statements, should the Eastern Region be eliminated? A) Yes, because eliminating the Eastern Region will increase combined income by $1,000, the operating loss of the Eastern Region B) No, because the Eastern Region outsells the Western Region by $47,800. C) Yes, because eliminating the Eastern Region will increase consolidated income by $31,600, the allocated indirect expenses of the Eastern Region D) No, because eliminating the Eastern Region will decrease consolidated income by $30,600, the positive departmental contribution to overhead. 33. True or False: Manager bonuses linked to income computed under variable costing can incentivize managers to over-produce (to produce more units than they can reasonably expect to sell). A) True B) False 34. Which of the following is a real-world example of a job order manufacturer? A) Pfizer B) Coca-Cola C) Walt Disney (movie production) D) Heinz Page 9
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