80.2K

Verified Solution

Link Copied!

recent year are 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 Smith's suggested cost pools and allocation bases are as follows: (Click the icon to view the suggested cost pools and allocation bases.) Requirement 1. Select two reasons why Wonderful Snacks should allocate corporate costs to each division. A. To provide information for economic decisions B. Income measurement for external parties C. To quantify the potential for sales growth D. To determine the likelihood of customer retention Data table Under the existing accounting system, costs incurred at corporate headquarters are collected in a single cost pool (\$1.55 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. Smith has analyzed the components of corporate costs and proposes that corporate costs be collected in four cost pools. Data table 1. Select two reasons why Wonderful 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 Smith's proposal relative to the existing single-cost-pool method? recent year are 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 Smith's suggested cost pools and allocation bases are as follows: (Click the icon to view the suggested cost pools and allocation bases.) Requirement 1. Select two reasons why Wonderful Snacks should allocate corporate costs to each division. A. To provide information for economic decisions B. Income measurement for external parties C. To quantify the potential for sales growth D. To determine the likelihood of customer retention Data table Under the existing accounting system, costs incurred at corporate headquarters are collected in a single cost pool (\$1.55 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. Smith has analyzed the components of corporate costs and proposes that corporate costs be collected in four cost pools. Data table 1. Select two reasons why Wonderful 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 Smith's proposal relative to the existing single-cost-pool method

Answer & Explanation Solved by verified expert

See Answer