value: 4.00 points Advertising department expenses of $26,700 and purchasing department expenses of $46,700 of Cozy Bookstore are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows. Purchase Department Books Sales $180,400 Orders 1,290 Magazines 123,000 690 Newspapers 106,600 1,020 Total $410,000 3,000 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments. (Amounts to be deducted should be indicated with minus sign.) Advertising Department Books Dept Magazines Dept Newspapers Dept Totals Purchasing Department Books Dept Magazines Dept Newspapers Dept Totals Allocation Base Percent of Allocation Base Numerator Denominator % of Total Cost to be Allocated Allocated Cost Allocation Percent of Allocation Base Base Cost to be Allocated Allocated Cost Numerator Denominator % of Total COZY BOOKSTORE Allocation of Expenses to Departments Allocation Base Expense Account Balance Advertising Purchasing Dept. Dept. Books Dept. Magazines Dept.Newspapers Dept. Dept. Total department $ $ $ 26,700 $ 46,700 $ 133,400 $ 320,100 expenses 667,000 140,100 Advertising Dept. Sales Purchasing Dept. Purch. orders Total expenses $ allocated to 667,000 operating depts. value: 4.00 points Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). Investment Center Electronics Sporting goods Net Average Invested Sales $10,800,000 8,100,000 Income Assets $661,500 $3,150,000 846,000 4,700,000 1- a. Compute return on investment for each department. Electronics Sporting Goods Return on Investment Choose Numerator: Choose Denominator: 1 I = = Return on Investment Return on investment 1- Using return on investment, which department is most efficient at using b. assets to generate returns for the company? Sporting goods Electronics 2- Assume a target income level of 12.6% of average invested assets. a. Compute residual income for each department. Investment Center Electronics Sporting Goods Net income Target net income Residual income 21 2- b. Which department generated the most residual income for the company? Sporting goods Electronics 3. Assume the Electronics department is presented with a new investment opportunity that will yield a 15.6% return on investment. Should the new investment opportunity be accepted? Yes, the new investment opportunity should be accepted No, the new investment opportunity should not be accepted