Carrejo Corporation has two divisions: Division M and Division N. Data from the most recent month appear below: 7. Total Company $404,000 152,130 251,870 192,000 59,870 52,520 $ 7,350 Division M Division N $223,000 86,970 136,030 105,000 31,030 28,990 $ 2,040 Sales Variable expenses. Contribution margin. Traceable fixed expenses Segment margin... Common fixed expenses. $181,000 65,160 115,840 87,000 28,840 23,530 $ 5.310 Net operating income.. Management has allocated common fixed expenses to the division based on their sales. The break-even in sales dollars for Division N is closest to: A. $392,211 B. $258,230 C. $172,131 D. $219,656

Carrejo Corporation has two divisions: Division M and Division N. Data from the most recent month appear below: 7. Total Company $404,000 152,130 251,870 192,000 59,870 52,520 $ 7,350 Division M Division N $223,000 86,970 136,030 105,000 31,030 28,990 $ 2,040 Sales Variable expenses. Contribution margin. Traceable fixed expenses Segment margin... Common fixed expenses. $181,000 65,160 115,840 87,000 28,840 23,530 $ 5.310 Net operating income.. Management has allocated common fixed expenses to the division based on their sales. The break-even in sales dollars for Division N is closest to: A. $392,211 B. $258,230 C. $172,131 D. $219,656

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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Whirly Corporation's contribution format income statement for the most recent month is shown below: Per Unit $31.00 18.00 $ 13.00 Sales (8,600 units) Variable expenses Contribution, margin Fixed expenses Net operating income Total $ 266,600 154,800 111,800 Required: (Consider each case independently): 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income 56,000 $ 55,800 1. What would be the revised net operating income per month if the sales volume increases by 90 units? 2. What would be the revised net operating income per month if the sales volume decreases by 90 units? 3. What would be the revised net operating income per month if the sales volume is.7,600 units?
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The following income statements illustrate different cost structures for two competing companies: Income Statements Company Name Perez Munoz Number of customers (a) 81 81 Sales revenue (a × $250) $ 20,250 $ 20,250 Variable cost (a × $175) N/A (14,175 ) Variable cost (a × $0) 0 N/A Contribution margin 20,250 6,075 Fixed cost (14,175 ) 0 Net income $ 6,075 $ 6,075 Required Reconstruct Perez’s income statement, assuming that it serves 162 customers when it lures 81 customers away from Munoz by lowering the sales price to $150 per customer. Reconstruct Munoz’s income statement, assuming that it serves 162 customers when it lures 81 customers away from Perez by lowering the sales price to $150 per customer.
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Piedmont Company segments its business into two regions-North and South. The company prepared the contribution format segmented income statement as shown: Sales Variable expenses Contribution margin Traceable fixed expenses Segment margin Common fixed expenses Net operating income Total Company $ 937,500 637,500 300,000 142,000 158,000 62,000 $ 96,000 North $ 750,000 600,000 150,000 71,000 $ 79,000 Required: 1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in dollar sales for the North region. 3. Compute the break-even point in dollar sales for the South region. South $ 187,500 37,500 150,000 71,000 $ 79,000
Last year's contribution format income statement for Huerra Company is given below: Unit $ 49.60 29.76 19.84 15.74 Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 40% Net income The company had average operating assets of $496,000 during the year. Required: 1. Compute last year's margin, turnover, and return on investment (ROI). For each of the following questions, indicate whether last year's margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI. Consider each question separately. 2. Using Lean Production, the company is able to reduce the average level of inventory by $95,000. 3. The company achieves a cost savings of $11,000 per year by using less costly materials. 4. The company purchases machinery and equipment that increase average operating assets by $124,000. Sales remain unchanged. The new, more efficient equipment reduces production costs by $7,000 per…
Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement (in terms of the Brazilian currency, the real, R) for last month is given below: Sales Variable expenses Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation Total traceable fixed expenses Divisional segment margin Common fixed expenses Operating income Sales Traceable fixed expenses: Total Company R 3,675,000 1,745,500 1,929,500 Traceable fixed expenses: R Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales Total traceable fixed expenses 634,000 449,000 233,000 1,316,000 Common fixed expenses: Top management can't understand why the Leather Division has such a low segment margin when its sales are only 25% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines.…
6. Using a responsibility income statement Shown below is the current monthly income statement of Metro Video, by profit centers: Sales Variable Costs Contribution margin Fixed costs traceable to departments Departments responsibility margins Common fixed costs Income from operations METRO VIDEO Income Statement by Profit Centers For the Month Ended April 30, 20 Metro Video Dollars % $560,000 100 (268,800) (48) $291,200 52 (67,200) (12) $224,000 (61,600) $162,400 40 29 Equipment Sales Dollars $280,000 (198,800) $ 81,200 (25,200) Segments $56,000 % 100 71) 29 (09) Video Rentals Dollars $280,000 (70,000) $210,000 (42,000) 20 $168,000 % 100 (25) 75 (15) 60 On the basis of this information, compute the increase in monthly income from operations that may be expected to result from each of the following actions: (a) Spending $5,000 per month in advertising is expected to increase sales in the Equipment Sales Department by 35%. $_ (b) Closing the Equipment Sales Department and allowing the…
Shirley Incorporated has three divisions, King, West and Gold. All common fixed costs are unavoidable. Following is the segmented income statement for the previous year: Sales revenue Variable costs Contribution margin Direct fixed costs Segment margin Common fixed costs (allocated) Net operating income (loss) King $ 1,040,000 312,000 $ 728,000 104,000 $ 624,000 391,000 $ 233,000 Required: a. What would Shirley's net income (loss) be if the West Division were dropped? b. What would Shirley's net income (loss) be if the Gold Division were dropped? Complete this question by entering your answers in the tabs below. Required A Required B What would Shirley's net income (loss) be if the West Division were dropped? Gold $426,000 251,340 $ 174,660 48.000 $ 126,660 159,375 $ (32,715) Total $ 2,048,000 889,260 $ 1,158,740 192,000 $ 966,740 763,000 $ 203,740