Acme Company has two divisions, East Division and West Division. Here are data regarding the current year: East Division West Division Sales revenue $560,000 $478,500 Variable costs 230,000 231,000 Contribution margin $330,000 $247,500 Traceable fixed costs 174,000 194,400 Segment margin $156,000 $53,100 Segment margin ratio 27.9% 11.1% Acme plans to discontinue the West Division. If the division is eliminated, 75% of its traceable fixed costs are avoidable. The remaining 25% are sunk costs. Acme's common fixed costs are $246,600. What would Acme's operating income (loss) be if it eliminates the West Division? $156,000 $(139,200) $(90,600) $(37,500)

Acme Company has two divisions, East Division and West Division. Here are data regarding the current year: East Division West Division Sales revenue $560,000 $478,500 Variable costs 230,000 231,000 Contribution margin $330,000 $247,500 Traceable fixed costs 174,000 194,400 Segment margin $156,000 $53,100 Segment margin ratio 27.9% 11.1% Acme plans to discontinue the West Division. If the division is eliminated, 75% of its traceable fixed costs are avoidable. The remaining 25% are sunk costs. Acme's common fixed costs are $246,600. What would Acme's operating income (loss) be if it eliminates the West Division? $156,000 $(139,200) $(90,600) $(37,500)

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...

See similar textbooks

Similar questions

Jemmott Corporation has two divisions: Western Division and Eastern Division. The following report is for the most recent operating period: Total Company Western Division Sales Variable expenses Contribution margin Traceable fixed expenses Segment margin Common fixed expenses Net operating income Eastern Division $ 406,000 $ 188,000 $ 218,000 111,880 63,920 47,960 294,120 124,080 170,040 191,000 85,000 106,000 103,120 39,080 64,040 69,020 31,960 37,060 $ 34,100 $ 7,120 $ 26,980 The common fixed expenses have been allocated to the divisions on the basis of sales. The company's overall break-even sales is closest to: Multiple Choice $94,243 $271,743 $264,685 $358,929
Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: Total Company Blue Division Gold Division Sales $ 522,000 $ 391,000 $ 131,000 Variable expenses 160,670 89,930 70,740 Contribution margin 361,330 301,070 60,260 Traceable fixed expenses 286,000 239,000 47,000 Segment margin 75,330 $ 62,070 $ 13,260 Common fixed expenses 73,080 Net operating income $ 2,250 The Gold Division's break-even sales is closest to: $102,174 $261,043 $142,043 $518,750
Selected sales and operating data for three divisions of different structural engineering firms are glven as follows: Division A $ 16, 200,000 $ 3,240,000 24 Division B Division C $ 26, 200,000 $ 5,240,000 Sales $ 28,960,000 Average operating assets Net operating income Minimum required rate of return 24 24 7,240,000 761,400 463,360 24 655,000 12.5e% 7.00% 7.5e% Required: 1. Compute the margin, turnover, and return on Investment (ROI) for each division. 2. Compute the residual Income (loss) for each division. 3. Assume that each division is presented with an Investment opportunity that would yleld a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance Is belng measured by residual Income, which division or divislons will probably accept the opportunity?
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 15,950,000 $ 28,760,000 $ 25,950,000 Average operating assets $ 3,190,000 $ 7,190,000 $ 5,190,000 Net operating income $ 733,700 $ 373,880 $ 752,550 Minimum required rate of return 6.00 % 6.50 % 14.50 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 7% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity?
Nuzum Corporation has two divisions: Division M and Division N. Data from the most recent month appear below: Total Division Division Company $557,000 $254,000 $303,000 144,910 412,090 172,720 239,370 273,000 128,000 145,000 139,090 94,690 M Sales Variable expenses Contribution margin Traceable fixed expenses 81', 280 63,630 Segment margin Common fixed expenses 94,370 51,510 $ 44,400 $ 1,540 $ 42,860 44,720 43,180 Net operating income Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division N is closest to: (Round your intermediate calculations to 2 decimal places.)
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 15,400,000 $ 28,320,000 $ 25,400,000 Average operating assets $ 3,080,000 $ 7,080,000 $ 5,080,000 Net operating income $ 693,000 $ 396,480 $ 736,600 Minimum required rate of return 7.00 % 7.50 % 14.50 % Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity?
Vernon transport company divides its operations into four divisions. A recent statement for its West Division folows Vernon Transport Comapny Wesy division Income Statement for year 3 Revenue $670,000 Salaries for drivers (520,000) Fuel expenses (67,000) Insurance (87,000) Division-level facility- sustaining costs (57,000) Companywide facility-sustaining costs (147,000) Net loss $208,000 Required a) By how much would cormpanywide income increase or decrease if West Division is estimated? Should West Division be eliminated? b) assume that West Division is able to increase its revenue to $760,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segemnt were eliminated. Should West Division be eliminated if revenue were $760,000? c) What is the mininum amount of revenue required to Jusify continuing the operation of West Divison? Complete this question by entering your answer in the table below. Income Would…
Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below. Total Company Division L $151,000 92,110 58,890 30,870 Division Q $390,000 195,000 195,000 97,600 $ 97,400 Sales $541,000 287,110 Variable expenses Contribution margin Traceable fixed expenses 253,890 128,470 Segment margin 125,420 $2 3 Common fixed expenses 70,310 Net operating income $ 55,110 The break-even in sales dollars for Division Q is closest to: (Round your Intermedlate calculations to 2 decimal places.) Multiple Cholce $327.250 O $195.20o S335.820 11:05 AM 自 0 W 92°F AQI 61 9/24/2021 here to search DELL
Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division QSales $ 517,000 $ 156,000 $ 361,000 Variable expenses 255,960 82,680 173,280 Contribution margin 261,040 73,320 187,720 Traceable fixed expenses 171,000 49,000 122,000 Segment margin 90,040 $ 24,320 $ 65,720 Common fixed expenses 87,890 Net operating income $ 2,150 The break-even in sales dollars for Division Q is closest to:
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Sales Average operating assets Net operating income Minimum required rate of return Division A $ 6,300,000 $ 1,260,000 340,200 20.00% Division B $ 10,300,000 $ 5,150,000 968,200 Division C $ 9,400,000 $ 1,880,000 249,100 17.00% 2$ 2$ 18.80% Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 20% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B…
Crane, Inc. has three divisions: Bud, Wise, and Er. The results of operations for May, 2022 are presented below. Units sold Revenue Less variable costs Less direct fixed costs Less allocated fixed costs Net income Bud 2,700 $63,000 28,800 12,600 5,400 $16,200 Wise 4,500 $45,000 23,400 17,100 9,000 $(4,500) Er 1,800 $36,000 14,400 10,800 3,600 $7,200 Total 9,000 $144,000 66,600 40,500 18,000 $18,900 All of the allocated costs will continue even if a division is discontinued. Crane allocates indirect fixed costs based on the number of units to be sold. Since the Wise division has a net loss, Crane is concerned that it should be discontinued. Crane thinks that if the division is closed, that sales at the Bud division will increase by 12% while sales at the Er division will stay the same.
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Sales Average operating assets Net operating income Minimum required rate of return Division A $6,300,000 $1,260,000 $ 340,200 20.00% Division B $10,300,000 $ 5,150,000 $ 968,200 18.80% Division C $9,400,000 $1,880,000 $ 249,100 17.00% Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. I Margin Turnover ROI Division A 5.40 % times % Division B % 2.00 times :% Division C % times % 2. Compute the residual income (loss) for each division. (Loss amounts should be indicated by a minus sign. Roui Division A Division B Division C Average operating assets Required rate of return % % % Required operating income Actual operating income Required operating income (above) Residual income (loss) 3. Assume that each division is presented with an investment opportunity that would y a. If performance is being…