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A B D E E F G H M11 Homework 11 Allocations and Departmental Income Statements Sales and Direct Expenses Total Sales and Expenses Coding Marketing Accounting Hiring Security C Suite Sales 3,000,000 1,000,000 800,000 1,200,000 Direct Expenses Direct Materials 105,000 20,000 50,000 35,000 Direct Labor 1,628,000 400,000 300,000 450,000 100,000 80,000 298,000 Depreciation - Equipment 72,060 20,000 2,000 15,000 1980 33080 - Supplies 43.000 5,000 25,000 10,000 3000 Total Direct Expenses 1,848,060 445,000 377,000 510,000 104,980 113,080 298,000 1 Gross Profit 1,151,940 555,000 423,000 690,000 (104,980) (113,080)| (298,000) 2 Indirect Expenses 3 Rent (allocate over square feet) 64,000 4 Utilities (allocate over square feet) 28,000 5 Corporate Training (allocate over # of emplo 50,000 6 Total Indirect Expenses 142,000 7 8 8 M11 Homework 11 Instructions: Allocate Indirect Expenses Sales and Direct Expenses Total Sales and Exp Coding Marketing Accounting Hiring Security C Suite Sales 3,000,000 1,000,000 800,000 1,200,000 Direct Expenses Direct Materials 105,000 20,000 50,000 35,000 Direct Labor 1,628,000 400,000 300,000 450,000 100,000 80,000 298,000 Depreciation - Equipment 72,060 20,000 2,000 15,000 1,980 33,080 Supplies 43,000 5,000 25,000 10,000 3,000 Total Direct Expenses 1,848,060 445,000 377,000 510,000 104,980 113,080 298,000 Gross Profit 1,151,940 555,000 423,000 690,000 (104,980) (113,080) (298,000) Indirect Expenses Total Allocation Rate Rent (allocate over square feet) 64,000 Utilities (allocate over square feet) 28,000 Corporate Training (allocate over # of emp 50,000 Total Indirect Expenses 142,000 Allocation Activities Coding Marketing Accounting Hiring Security C Suite Total Square Feet Used 1,500 3,650 2,000 250 100 2,500 #employees 90 50 100 5 2 2 3 M11 Homework 11 Instructions: Calculate the service costs allocation rate Sales and Direct Expenses Total Sales and Exper Coding Marketing Hiring Security C Suite Accounting 1,200,000 Sales 3,000,000 1,000,000 800,000 Direct Expenses Direct Materials 105,000 20,000 50,000 35,000 Direct Labor 1,628,000 400,000 300,000 450,000 100,000 80,000 298,000 72,060 20,000 2,000 15,000 1.980 33,080 Depreciation - Equipment Supplies 43,000 5,000 25,000 10,000 3,000 Total Direct Expenses 1,848,060 445,000 377,000 510,000 104,980 113,080 298,000 1,151,940 555,000 423,000 690,000 (104,980) (113,080) (298,000) Total Allocation Rate Gross Profit Indirect Expenses Rent (allocate over square feet) Corporate Training (allocate over #o Total Indirect Expenses 64,000 28,000 50,000 142,000 Total Allocation Rate Service Department Exepenses Hiring (allocate over # of new hires) Security (allocate over square feet) C Suite (allocate over # of employees) Total Service Department Expenses Allocation Activities Total Number of new hires 20 7 13 Square Feet Used 1,500 3,650 2,000 Number of employees 90 50 100 M11 Homework 11 Step 8: Allocate Service Expenses Sales and Direct Expenses Total Sales and E Coding Marketing Accounting Hiring Security C Suite Sales 3,000,000 1,000,000 800,000 1,200,000 Direct Expenses Direct Materials 105,000 20,000 50,000 35,000 Direct Labor 1,628,000 400,000 300,000 450,000 100,000 80,000 298,000 Depreciation - Equipment 72,060 20,000 2,000 15,000 1,980 33,080 Supplies 43,000 5,000 25,000 10,000 3,000 Total Direct Expenses 1,848,060 445,000 377,000 510,000 104,980 113,080 298,000 Gross Profit 1,151,940 555,000 423,000 690,000 (104,980) (113,080) (298,000) Total Allocation Rate Rent (allocate over square feet) 64,000 Utilities (allocate over square feet) 28,000 Corporate Training (allocate over # of er 50,000 142,000 Total Indirect Expenses Service Department Exepenses Total Allocation Rate Hiring Security C Suite Total Service Department Expenses Allocation Activities Total Number of new hires 20 7 13 Square Feet Used 1,500 3,650 2,000 Number of employees 90 50 100 M11 Homework 11 Step 9: Calculate Net Income for each profit center Sales and Direct Expenses Total Sales and Ex Coding Marketing Accounting Hiring Security C Suite Sales 3,000,000 1,000,000 800,000 1,200,000 Direct Expenses Direct Materials 105,000 20,000 50,000 35,000 Direct Labor 1,628,000 400,000 300,000 450,000 100,000 80,000 298,000 Depreciation - Equipment 72,060 20,000 2,000 15,000 1,980 33,080 Supplies 43,000 5,000 25,000 10,000 3,000 Total Direct Expenses 1,848,060 445,000 377,000 510,000 104,980 113,080 298,000 Gross Profit 1,151,940 555,000 423,000 690,000 (104,980) (113,080) (298,000) Total Allocation Rate Rent (allocate over square feet) 64,000 Utilities (allocate over square feet) 28,000 Corporate Training (allocate over # of em 50,000 142,000 Total Indirect Expenses Service Department Exepenses Total Allocation Rate Hiring Security C Suite Total Service Department Expenses Total Indirect and Service Expenses Net Income M11 Homework 11 Instructions: Calculate the Return on Investment, Residual Income, Profit Margin and Invenstment turnover for each of our three profit centers Selected Financial Information Coding Marketing Accounting Sales Direct Expense Indirect and Service Expense Net Income Average Invested Assets 4,000,000 4,500,000 7,500,000 Target ROI 8% 3% 5% ROI (first way) Residual Income Profit Margin Investmnet Turnover ROI (second way) M11 Homework 11 Instructions: Calculate the rate by which to allocate Indirect Expenses Sales and Direct Expenses Total Sales and Expe Coding Marketing Accounting Hiring Security C Suite Sales 3,000,000 1,000,000 800,000 1,200,000 Direct Expenses Direct Materials 105,000 20,000 50,000 35,000 Direct Labor 1,628,000 400,000 300,000 450,000 100,000 80,000 298,000 Depreciation - Equipment 72,060 20,000 2,000 15,000 1,980 33,080 Supplies 43,000 5,000 25,000 10,000 3,000 Total Direct Expenses 1,848,060 445,000 377,000 510,000 104,980 113,080 298,000 Gross Profit 1,151,940 555,000 423,000 690,000 (104,980) (113,080) (298,000) Indirect Expenses Total Allocation Rate Rent (allocate over square feet) 64,000 Utilities (allocate over square feet) 28,000 Corporate Training (allocate over # of emplo, 50,000 Total Indirect Expenses 142,000 Allocation Activities Coding Marketing Accounting Hiring Security C Suite Total Square Feet Used 1,500 3,650 2,000 250 100 2,500 # employees 90 50 100 5 2 3