1. The amount by which a department's revenues exceed its direct costs and expenses is the:

(A)gross profit (B)net sales (C)contribution margin (D)departmental profit (E)departmental contribution margin

2. Which of the following is most likely to be considered a profit center?

(A)An individual retail store in a large chain.

(B)The grocery department of a Wal-Mart Supercenter or target Superstore

(C)The personnel office of a business

(D)A stand-alone eye clonoc.

(E)The maintenance department of a large retail operation.

3. The Footwear Department of Lee's Department Store had sales of $188,000, cost of goods sold of $132,500, indirect expenses of $13,250, and direct expenses of $27,500 for the current period. The Footwear Department's contribution to overhead as a percent of sales is:

(A)85.4% (B)14.9% (C)7.8% (D)66.7% (E)29.5%

4. A sawmill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows:

Grade Production Market Price

Structural 25,000 board feet $1,350/1,000 bd. ft.

No.1 Common 75,000 board feet $750/1,000 bd. ft.

No.2 Common 100,000 board feet $300/1,000 bd. ft.

How much of the $70,000 joint cost should be allocated to No. 2 common?

(A)$17,500

(B)35,000

(C)$0

(D)$70,000

(E)$23,333

5. Data pertaining to a company's joint manufacturing process for the current period follows:

Product A Product B

Quantities produced 200 lbs. 100 lbs.

Processing cost after products are seperated $1,100 $400

Market value at point of separation $8/lb. $16/lb

What cost amount should be allocated to Product A for this period's $660 of joint costs on the basis of market value at the point of separation?

(A)$330

(B)$194.12
(C)$484
(D)$220
(E)$440

6. A department that incurs costs without directly generating revenues is a

(A)Production center

(B)Profit Center

(C)Service Center

(D) permormance Center

(E)Cost center

7.A cost center is a unit of a business that incurs costs but does not directly generate revenues. Which of the following would definitely not be considered a cost center?

(A)Pharmacy in a grocery store

(B)Advertising department

(C)Purchasing Department
(D)Research Department
(E)Accounting Department

8. A sawmill bought a shipment of logs for $40,000. When cut, the logs produced a million board feet of lumber in the following grades:
Type 1 - 400,000 bd. ft. priced to sell at $0.12 per bd. ft.
Type 2 - 400,000 bd. ft. priced to sell at $0.06 per bd. ft.
Type 3 - 200,000 bd. ft. priced to sell at $0.04 per bd. ft.

How much cost should be allocated to Type 1 and type 2, respectively?

Type 1 Type 2

(A) $16,000 $16,000

(B) $13,333 $4,444

(C) $40,000 $24,000
(D) $24,000 $12,000
(E) $24,000 $8,000