The Following Is a Summarized Income Statement for McClaron Manor

question 159

Multiple Choice

The following is a summarized income statement for McClaron Manor Co.'s profit center 12608 for April:
$$\begin{array} { | l | r | r | } \hline \text { Contribution Margin } & & \$ 175,000 \\\hline \text { Period Expenses } & \$ 11,000 & \\\hline \text { Manager' s Salary } & \$ 2,000 & \\\hline \text { Corporate Expense Allocation } & \$ 8,000 & \underline { ( \$ 21,0000 } \\\hline & & \$ 154,000 \\\hline\end{array}$$ Which of the following amounts is most likely subject to the control of the profit center's manager? (CPA,adapted)

• A) Contribution Margin of $175,000.
• B) Contribution Margin of $175,000 and Period Expenses of $11,000.
• C) Contribution Margin of $175,000 and Period Expenses of $13,000.
• D) Contribution Margin of $175,000 and Period Expenses of $21,000.

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Definitions:

T-Accounts

A visual representation of accounts used in double-entry bookkeeping, showing debits on the left and credits on the right.

Direct Materials Cost

The expense incurred for raw materials that are directly incorporated into a finished product.

T-Accounts

A simplified form of accounting ledger that uses a two-column format to show the increases and decreases in different financial accounts.

Job-Order Costing System

An accounting method that accumulates costs for individual units or small batches of production, often used for custom orders.