Kelvar: Segment Margins and Support Resources — سؤال دراسة حالة في المحاسب الإداري المعتمد

The case

Kelvar supplies components to mobility-equipment manufacturers through three operating divisions. Its chief operating officer wants segment results that distinguish directly traceable fixed costs from common headquarters costs.

Annual measure	Sensors	Housings	Controllers
Revenue	$4,200,000	$2,800,000	$3,000,000
Variable expenses	$2,100,000	$1,540,000	$2,250,000
Traceable fixed expenses	$1,150,000	$760,000	$1,050,000

Common headquarters fixed expenses are $1,400,000. A segment margin is defined here as revenue minus variable expenses and traceable fixed expenses, before common headquarters expenses.

Kelvar also analyzes the following annual support pools and usage. These costs are already included in the reported expense figures above or in headquarters expense; the allocation exercise measures attribution and must not add the same costs again when calculating segment margins.

Support pool	Annual cost	Allocation base	Total usage	Sensors	Housings	Controllers
Digital support	$180,000	Support tickets	3,000	1,200	900	900
Training	$120,000	Training seats	200	80	50	70
Equipment care	$360,000	Machine hours	60,000	15,000	20,000	25,000
Site security	$90,000	Square meters	15,000	6,000	4,000	5,000

For evaluating possible profit improvements, assume a proposed price increase would not change unit volume, a verified scrap reduction would not change product quality, and a proposed fixed-cost elimination would not reduce capacity or revenue.

Assumptions

Segment margins exclude common headquarters fixed costs and do not add support pools a second time.
Use the direct method for support allocations; support departments provide no services to each other in this exercise.
All listed driver quantities are annual actual usage and sum to their respective total denominators.
A support allocation is information for analysis; an allocation change alone does not change total company cost.
Do not assume every traceable fixed cost disappears upon closing a division; only an explicitly avoidable cost may be treated as eliminated.

Match each Kelvar management assignment with its responsibility-center classification. Base the classification on the decisions described, not the manager's title.

The calibration supervisor is accountable for efficient support spending but cannot set sales prices or invest in equipment.

The regional account office negotiates selling prices and wins customer contracts but controls neither production costs nor operating assets.

A division head controls revenue and operating costs, while the corporate board approves every capital investment.

A business-unit president controls revenue, costs, and the acquisition or disposal of operating assets.

Before deducting common headquarters expenses, the division with the lowest segment margin is Division with lowest segment margin . Its segment result is a Segment result direction of Segment result magnitude .

Under the stated demand, quality, and capacity assumptions, which THREE actions would improve Controllers' segment margin and total company operating income? Select exactly THREE.

Select 3 answers. Selected 0 / 3

Answer Transfer part of the verified common headquarters expense to another division without reducing any spending. Implement the feasible selling-price increase with no reduction in unit sales. Eliminate a verified unnecessary fixed cost traceable to Controllers, with no operating impact. Allocate less support expense to Controllers under a validated new driver while leaving all resource usage and company spending unchanged. Reduce material scrap through the validated process change while preserving output and quality. Close Controllers based solely on its reported segment margin, without examining avoidable costs or lost contribution.

Which TWO reasons support giving Kelvar's divisions usage-based support-cost reports? Select exactly TWO.

Select two answers. Selected 0 / 2

Answer Managers can see how their use of support services contributes to resource demands. Allocated support cost becomes avoidable immediately whenever a division reduces sales. Every allocation proves that the selected driver perfectly causes the cost. Managers gain information for evaluating process alternatives and the resources their activities consume. The reports eliminate the need to identify which support resources can actually be reduced.

Arrange the steps of Kelvar's direct-method support-cost allocation project in dependency order, so that each step uses only the outputs of earlier steps.

Dragging, or the arrow buttons, to reorder.

Apply each pool rate to each division's usage of its allocation base.
Document which support pools and operating divisions are included in the analysis.
Sum each division's assigned costs and reconcile all assignments to total pool costs.
Validate pool costs and total driver quantities, then divide to calculate pool rates.
Select and define a suitable usage base for each included support pool.

Saving…

How much of the four annual support pools should the usage report assign to Controllers? Enter a positive whole-dollar amount rounded to the nearest dollar. Do not add this amount again to the already reported segment expenses.

Answer USD

A whole number.

The marks, the correct answers and the explanations appear as soon as the answers are submitted. Unanswered questions earn no marks.

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