Nama : Irga Ayudias Tantri

NIM : 12030124100011

Case 12-52
Cathy’s Classic Clothes is a retailer that sells to professional women in the northeast. The firm
leases space for stores in upscale shopping centers, and the organizational structure consists of
regions, districts, and stores. Each region consists of two or more districts; each district consists
of three or more stores. Each store, district, and region has been established as a profit center. At
all levels, the company uses a responsibility-accounting system focusing on information and
knowledge rather than blame and control. Each year, managers, in consultation with their
supervisors, establish financial and nonfinancial goals, and these goals are integrated into the
budget. Actual performance is measured each month
The New England Region consists of the Coastal District and the Inland District. The Coastal
District includes the New Haven, Boston, and Portland stores. The Coastal District’s performance
has not been up to expectations in the past. For the month of May, the district manager has set
performance goals with the managers of the New Haven and Boston stores, who will receive
bonuses if certain performance measures are exceeded. The manager in Portland decided not to
participate in the bonus scheme. Since the district manager is unsure what type of bonus will
encourage better performance, the New Haven manager will receive a bonus based on sales in
excess of budgeted sales of $570,000, while the Boston manager will receive a bonus based on
operating income in excess of budget. The company’s operating income goal for each store is 12
percent of sales. The budgeted sales revenue for the Boston store is $530,000.
Other pertinent data for May are as follows:
 Coastal District sales revenue was $1,500,000, and its cost of goods sold amounted to
$633,750.
 The Coastal District spent $75,000 on advertising.
 General and administrative expenses for the Coastal District amounted to $180,000.
 At the New Haven store, sales were 40 percent of Coastal District sales, while sales at the
Boston store were 35 percent of district sales. The cost of goods sold in both New Haven
and Boston was 42 percent of sales.
 Variable selling expenses (sales commissions) were 6 percent of sales for all stores,
districts, and regions.
 Variable administrative expenses were 2.5 percent of sales for all stores, districts, and
regions.
 Maintenance cost includes janitorial and repair services and is a direct cost for each store.
The store manager has complete control over this outlay. Maintenance costs were incurred
as follows: New Haven, $7,500; Boston, $600; and Portland, $4,500.
  Advertising is considered a direct cost for each store and is completely under the control
of the store manager. The New Haven store spent two-thirds of the Coastal District total
outlay for advertising, which was 10 times the amount spent in Boston on advertising.
 Coastal District rental expense amounted to $150,000.
 The rental expenses at the New Haven store were 40 percent of the Coastal District’s total,
while the Boston store incurred 30 percent of the district total.
 District expenses were allocated to the stores based on sales.
 New England Region general and administrative expenses of $165,000 were allocated to
the Coastal District. These expenses were, in turn, allocated equally to the district’s three
stores
Required:
1. Prepare the May segmented income statement for the Coastal District and for the New
Haven and Boston stores
Jawaban :
Cathy's Classic Clothes Northeast Region
Segmented income statement
For May
Coastal District New Haven Store Boston Store
Sales $ 1.500.000 $ 600.000 $ 525.000
Less : Cost Of Good Sold $ 633.750 $ 252.000 $ 220.500
Gross Margin $ 866.250 $ 348.000 $ 304.500

Operating expenses :
Selling Expenses $ 90.000 $ 36.000 $ 31.500
Administrative Expenses $ 37.500 $ 15.000 $ 13.125
Other direct expenses :
Store Maintenance $ 12.600 $ 7.500 $ 600
Adevertising $ 75.000 $ 50.000 $ 5.000
Rent and other cost $ 150.000 $ 60.000 $ 45.000
Direct general administrative Expenses $ 180.000 $ 72.000 $ 63.000
Region general and administrative expenses $ 165.000 $ 55.000 $ 55.000
Total Expenses $ 710.100 $ 295.500 $ 213.225
Net Income $ 156.150 $ 52.500 $ 91.275

2. Compute the Portland store’s operating income for May

Jawaban :
Operating Income = Net Income Coastal District – New Haven Store – Boston Store
= $ 156.150 - $ 52.500 - $ 91.275
= $ 12.375
3. Discuss the impact of the responsibility-accounting system and bonus structure on the
managers’ behavior and the effect of their behavior on the financial results for the New
Haven store and the Boston store
Jawaban :
 - Dampak yang terjadi pada Toko New Haven yaitu laba bersih toko kurang dari 9
persen dari penjualan dan hanya 34 persen dari total laba bersih. Karena bonusnya
didasarkan pada penjualan di atas $570.000 maka manager lebih berfokus pada
penjualan dan tidak memperhatikan biaya yang dikendalikan serta dalam upaya untuk
memaksimalkan penjualan, toko New Haven menghabiskan 10 kali lebih banyak dari
pada toko Boston untuk iklan, tetapi hanya menghasilkan $75.000 lebih banyak dalam
penjualan. Sehingga iklan pasti tidak terlalu efektif dan harus dikontrol dengan lebih
baik.
- Dampak yang terjadi pada Toko Boston yaitu karena toko ini menerapkan bonus
berdasarkan laba bersihnya sehingga kurangnya pengeluaran mungkin dapat
merugikan karena manager lebih memaksimalkan laba bersih sehingga mengurangi
biaya-biaya yang tidak perlu seperti pemeliharaan took dan iklan.

4. The assistant controller for the New England Region, Jack Isner, has been a close friend of
the New Haven store manager for over 20 years. When Isner saw the segmented income
statement (as prepared in requirement 1), he realized that the New Haven store manager
had really gone over board on advertising expenditures. To make his friend look better to
the regional management, he reclassified $25,000 of the advertising expenditures as
miscellaneous expenses, and buried them in rent and other costs. Comment on the ethical
issues in the assistant controller’s actions. (Refer to specific ethical standards that were
given in Chapter 1.)
Jawaban :
Tindakan asisten pengontrol ini melanggar beberapa standar perilaku etis akuntan
manajemen, yaitu Competence, integrity dan objectivity dimana seharusnya manager
sepenuhnya mengungkap semua informasi yang relevan,wajar dan andal.
Case 12-53
Pacific Rim Industries is a diversified company whose products are marketed both domestically
and internationally. The company’s major product lines are furniture, sports equipment, and
household appliances. At a recent meeting of Pacific Rim’s board of directors, there was a lengthy
discussion on ways to improve overall corporate profitability. The members of the board decided
that they required additional financial information about individual corporate operations in order
to target areas for improvement
Danielle Murphy, the controller, has been asked to provide additional data that would assist the
board in its investigation. Murphy believes that income statements, prepared along both product
lines and geographic areas, would provide the directors with the required insight into corporate
operations. Murphy had several discussions with the division managers for each product line and
compiled the following information from these meetings
1. The division managers concluded that Murphy should allocate fixed manufacturing
overhead to both product lines and geographic areas on the basis of the ratio of the variable
costs expended to total variable costs.
2. Each of the division managers agreed that a reasonable basis for the allocation of
depreciation on plant and equipment would be the ratio of units produced per product line
(or per geographical area) to the total number of units produced.
3. There was little agreement on the allocation of administrative and selling expenses, so
Murphy decided to allocate only those expenses that were traceable directly to a segment.
For example, manufacturing staff salaries would be allocated to product lines, and sales
staff salaries would be allocated to geographic areas. Murphy used the following data for
this allocation.

4. The division managers were able to provide reliable sales percentages for their product
lines by geographical area.

Murphy prepared the following product-line income statement based on the data
presented above
Required:
1. Prepare a segmented income statement for Pacific Rim Industries based on the company’s
geographical areas. The statement should show the operating income for each segment.
Jawaban :

* Sales in unit =Total Unit x % Of Sales

United States :
Furniture (160.000 x 40%) 64.000
Sport (180.000 x 40%) 72.000
Appliances (160.000 x 20%) 32.000

Canada :
Furniture (160.000 x 10%) 16.000
Sport (180.000 x 40%) 72.000
Appliances (160.000 x 20%) 32.000

Asia :
Furniture (160.000 x 50%) 80.000
Sport (180.000 x 20%) 36.000
Appliances (160.000 x 60%) 96.000

*Revenue = Unit Sold x Unit Price

United States :
Furniture (64.000 x $ 8) $ 512.000
Sport (72.000 x $20) $ 1.440.000
 Appliances (32.000 x $15) $ 480.000

Canada :
Furniture (16.000 x $ 8) $ 128.000
Sport (72.000 x $20) $ 1.440.000
Appliances (32.000 x $15) $ 480.000

Asia :
Furniture (80.000 x $ 8) $ 640.000
Sport (36.000 x $20) $ 720.000
Appliances (96.000 x $15) $ 1.440.000

*Variable Cost = Unit Sold x Variable Manufakturing Cost + Variable Selling Cost
Variable
Variable Selling
Unit Sold Manufakturing Cost Cost Variable Cost
United States :
Furniture 64.000 4,00 2,00 384.000,00
Sport 72.000 9,50 2,50 864.000,00
Appliances 32.000 8,25 2,25 336.000,00

Canada :
Furniture 16.000 4,00 2,00 96.000,00
Sport 72.000 9,50 2,50 864.000,00
Appliances 32.000 8,25 2,25 336.000,00

Asia :
Furniture 80.000 4,00 2,00 480.000,00
Sport 36.000 9,50 2,50 432.000,00
Appliances 96.000 8,25 2,25 1.008.000,00

*Manufacturing Overhead
Total Allocated
Manufacturing Proportion manufacturing Variable
Overhead of total Cost Cost
United States $ 500.000 33% $ 165.000 $ 1.584.000
Canada $ 500.000 27% $ 135.000 $ 1.296.000
Asia $ 500.000 40% $ 200.000 $ 1.920.000
TOTAL $ 500.000 $ 4.800.000
* Depreciation Expenses
Total Proportion Allocated
Depreciation of total Depreciation Unit Sold
United States $ 400.000 33,60% $ 134.400 $ 168.000
Canada $ 400.000 24% $ 96.000 $ 120.000
Asia $ 400.000 42,40% $ 169.600 $ 212.000
TOTAL $ 400.000 $ 500.000

Pacific Rim Industries

Segmented income statement by geographical areas
For the Fiscal Year Ended April 30, 20x0
Geographical Areas
United States Canada Asia Unallocated Total
Sales in Unit
Furniture 64.000 16.000 80.000 160.000
Sport 72.000 72.000 36.000 180.000
Appliances 32.000 32.000 96.000 160.000
Total Unit Sales 168.000 120.000 212.000 500.000
Revenue
Furniture $ 512.000 $ 128.000 $ 640.000 $ 1.280.000
Sport $ 1.440.000 $ 1.440.000 $ 720.000 $ 3.600.000
Appliances $ 480.000 $ 480.000 $ 1.440.000 $ 2.400.000
Total Revenue $ 2.432.000 $ 2.048.000 $ 2.800.000 $ 7.280.000
Variable Cost
Furniture $ 384.000 $ 96.000 $ 480.000 $ 960.000
Sport $ 864.000 $ 864.000 $ 432.000 $ 2.160.000
Appliances $ 336.000 $ 336.000 $ 1.008.000 $ 1.680.000
Total Variable Cost $ 1.584.000 $ 1.296.000 $ 1.920.000 $ 4.800.000
Contibution Margin $ 848.000 $ 752.000 $ 880.000 $ 2.480.000

Fixed Cost
Manufacturing Overhead $ 165.000 $ 135.000 $ 200.000 $ 500.000
Depreciation $ 134.400 $ 96.000 $ 169.600 $ 400.000
Administrative and selling expenses $ 60.000 $ 100.000 $ 250.000 $ 750.000 $ 1.160.000
Total Fixed Cost $ 359.400 $ 331.000 $ 619.600 $ 750.000 $ 2.060.000
Operating Income $ 488.600 $ 421.000 $ 260.400 -$ 750.000 $ 420.000

2. As a result of the information disclosed by both segmented income statements (by product
line and by geographic area), recommend areas where Pacific Rim Industries should focus
its attention in order to improve corporate profitability
Jawaban :
Untuk meningkatkan Probabilitas perusahaan maka manager harus lebih memusatkan
perhatian pada :
- Laporan Laba rugi menurut lini produk dimana lini produk furniture ini mungkin tidak
menguntungkan karena biaya tetap dibebankan ke lini produk yang menimbulkan
kerugian sehingga manager harus focus terhadap kenaikan harga jual produk,
memotong biaya variable yang terkait dengan lini produk dan menghentikan
pembuatan furniture dan lebih berkonsentrasi pada lini produk yang lebih
menguntungkan
- Laporan Laba rugi berdasarkan wilayah geografis menunjukkan bahwa pasar Asia
adalah wilayah penjualan yang paling tidak menguntungkan. Untuk meningkatkan
margin keuntungan di pasar Asia, manajemen sebaikanya menyelidiki penjualan
disetiap wilayah dan mempertimbangkan untuk meningkatkan penjualan karena lini
produk memberikan kontribusi laba terkecil
- Manajemen harus meninjau biaya yang tidak dialokasikan dalam upaya untuk
mengurangi biaya ini dan meningkatkan profitabilitas secara keseluruhan.