ACCT 2302 Managerial Accounting Chapter 22 Ex 22-5 and 22-7

Exercise 22-5 Service department expenses allocated to operating departments LO P2

Advertising and purchasing department expenses 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.    DepartmentSalesPurchase Orders  Books$447,000   425   Magazines 145,000   312   Newspapers 208,000   265       Total$800,000   1,002       Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments (see the expenses below). Exercise 22-7 Investment center analysis LO A1You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $500,000 investment and is expected to yield annual net income of $80,000. The second location (B) requires a $200,000 investment and is expected to yield annual net income of $40,000.Compute the return on investment for each Fast & Great Burgers alternative.