Answer 1 and 2 Problem 2 (Segmented Income Statement)Sterling Company, a wholesale distributor of DVDS, has been experiencinglosses for some time, as shown by its most recent monthly income statementbelow:Sales....Less variable expenses....Contribution marginLess fixed expenses.Net operating loss...P1,500,000588,000912,000945,000P (33,000)In an effort to isolate the problem, the president has asked for an incomestatement segmented by geographic market. Accordingly, the AccountingDepartment has developed the following data:Geographic MarketCentralEastWestSales...P400,000P600,000P500,000Variable expenses as apercentage of sales. .Traceable fixed expenses....52%30%40%P240,000P330,000P200,000Required:1. Prepare an income statement segmented by geographic market, as desiredby the president. Show both Amount and Percent columns for thecompany as a whole and for each geographic market. Carry percentagecomputations to one decimal place. 250 Chapter 92. The company's sales manager believes that sales Central geographismarket could be increased by 15% if advertising were increased byP25.000 each month. Would you recommend the increased advertisine?Show computations to support your answer.

The question is related to Marginal Costing. The details are given. Required 1. Prepare Income…

Answered: Answer 1 and 2

Business

Accounting

Answer 1 and 2

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

Answer 1 and 2

Problem 2 (Segmented Income Statement)
Sterling Company, a wholesale distributor of DVDS, has been experiencing
losses for some time, as shown by its most recent monthly income statement
below:
Sales....
Less variable expenses....
Contribution margin
Less fixed expenses.
Net operating loss...
P1,500,000
588,000
912,000
945,000
P (33,000)
In an effort to isolate the problem, the president has asked for an income
statement segmented by geographic market. Accordingly, the Accounting
Department has developed the following data:
Geographic Market
Central
East
West
Sales...
P400,000
P600,000
P500,000
Variable expenses as a
percentage of sales. .
Traceable fixed expenses....
52%
30%
40%
P240,000
P330,000
P200,000
Required:
1. Prepare an income statement segmented by geographic market, as desired
by the president. Show both Amount and Percent columns for the
company as a whole and for each geographic market. Carry percentage
computations to one decimal place.

250 Chapter 9
2. The company's sales manager believes that sales Central geographis
market could be increased by 15% if advertising were increased by
P25.000 each month. Would you recommend the increased advertisine?
Show computations to support your answer.

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