Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I need a full answer, please Lucy Brown, controle of the Yummy Snacks, is preparing a presentation to senior executive about the performance of its
I need a full answer, please
Lucy Brown, controle of the Yummy Snacks, is preparing a presentation to senior executive about the performance of its four avion. Summary data couted to the four visions for the most recent year ar as follows (Click the icon to view the summary data) Click the icon to view more information The components of corporate costs for the most recent year and Brown's suggested cost pools and location base areas follows: 1. Click the icon to view the suggested cost pools and alocation bases) Read the requirements Requirement 1. Select two reason why Yummy Snacks should allocate corporate cou to each division To provide formation for economic decisions C. To determine the likelihood of customer retention Income measurement for external parties CID. To quantity the potential for sale growth Requirement 2. Calculate the operating income at each division when all corporate costs are located based on revances of each division (Round location proportions to one place decimal to the places XXX). Enterperating losses with minus signs or pentheses Candy Nute Crackers Cookies Operating income 3 624,500 5 504 3205 (1.000) $ 219, 120 Allowed corporate cost Division operating income oral B D E DIVISIONS 2 2 Nuts Crackers Cookies Total 3 Revenue Candy $ 1,152,000 $ 627,440 $ 524,560 $ 1,024,000 $ 439,680 608,000 $ 609,000 4 Operating Costs 416,000 $3,200,000 196,880 1,873,000 219,120 $ 1,327,000 5 Operating Income 584,320$ (1,000) $ 6 Identifiable assets $ 2,133,000 $ 3,713,000 $ 1,185,000 $ 3,910 7 Number of employees 869,000 $ 7,900,000 340 17,000 5,440 7,310 Print Done A B D Suggested 11 Corporate Cost Category Amount Cost Pool Suggested Allocation Base 12 Interest on debt $ 680,000 Cost Pool 1 Identifiable assets 13 Corporate salaries 170,000 Cost Pool 2 14 Accounting and control 110,000 Cost Pool 2 Division revenues 15 General marketing 150,000 Cost Pool 2 16 Public affairs 100,000 Cost Pool 3 Positive operating income 17 Personnel and payroll 90,000 Cost Pool 4 Number of employees 18 Total $ 1,300,000 Brown proposes that this cost be allocated using operating income (if positive) of divisions, with 19 only divisions with positive operating income included in the allocation base. Under the existing accounting system, costs incurred at corporate headquarters are collected in a single cost pool ($1.3 million in the most recent year) and allocated to each division on the basis of its actual revenues. The top managers in each division share in a division-income bonus pool. Division income is defined as operating income less allocated corporate costs. Brown has analyzed the components of corporate costs and proposes that corporate costs be collected in four cost pools. Print Done 1. Select two reasons why Yummy Snacks should allocate corporate costs to each division. 2. Calculate the operating income of each division when all corporate costs are allocated based on revenues of each division. 3. Calculate the operating income of each division when all corporate costs are allocated using the four cost pools. 4. How do you think the division managers will receive the new proposal? What are the strengths and weaknesses of Brown's proposal relative to the existing single-cost-pool method? Print Done Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started