EXERCISE 4-5 Companywide and Segment Break-Even Analysis L04-50 oldsheV S-310x3 Piedmont Company segments its business into two regions-North and South. The company pre- pared the contribution format segmented income statement as shown below: stab ugros odi Sales Variable expenses. Contribution margin Traceable fixed expenses Segment margin Common fixed expenses. Net operating income.. Total Company $600,000 360,000 240,000 120,000 120,000 50,000 $ 70,000 Required: 1. 2. Compute the companywide break-even point in dollar sales. 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. North South $400,000 $200,000 280,000 80,000 120,000 60,000 $ 60,000 120,000 60,000 $ 60,000

EXERCISE 4-5 Companywide and Segment Break-Even Analysis L04-50 oldsheV S-310x3 Piedmont Company segments its business into two regions-North and South. The company pre- pared the contribution format segmented income statement as shown below: stab ugros odi Sales Variable expenses. Contribution margin Traceable fixed expenses Segment margin Common fixed expenses. Net operating income.. Total Company $600,000 360,000 240,000 120,000 120,000 50,000 $ 70,000 Required: 1. 2. Compute the companywide break-even point in dollar sales. 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. North South $400,000 $200,000 280,000 80,000 120,000 60,000 $ 60,000 120,000 60,000 $ 60,000

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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Exercise 18-8 (Algo) Computing missing amounts in contribution margin Income statements LO A1 Compute the missing amounts in the contribution income statement shown below: (Round "Per Unit" answers to 2 decimal places.) Company A Company B Number of units sold Sales Variable costs Contribution margin Fixed costs Income 2,375 Total $ 465,000 $ 97.00 Per unit Total Per unit 302,400 123,500 166,250 $ 108,000 61,750
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Problem 12-21 (Algo) Prepare a contribution margin format income statement; answer what-if questions LO 12-7, 12-8, 12-9 Shown here is an income statement in the traditional format for a firm with a sales volume of 7,500 units. Cost formulas also are shown: Revenues Cost of goods sold ($5,900 + $2.25/unit) Gross profit Operating expenses: Selling ($1,200 + $0.10/unit) Administrative ($3,500 + $0.20/unit) Operating income $34,400 22,775 $ 11,625 1,950 5,000 $ 4,675 Required: a. Prepare an income statement in the contribution margin format. b. Calculate the contribution margin per unit and the contribution margin ratio. c. Calculate the firm's operating income (or loss) if the volume changed from 7,500 units to 1. 11,250 units. 2. 3,750 units. d. Refer to your answer to part a for total revenues of $34,400. Calculate the firm's operating income (or loss) if unit selling price and variable expenses per unit do not change and total revenues 1. Increase by $14,500. 2. Decrease by $3,000.
Exercise 11-15A (Algo) Using contribution margin format income statement to measure the magnitude of operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Benson, a merchandising firm: BENSON COMPANY Income Statement For the Year Ended December 31 Sales revenue (4,500 units × $163) $ 733,500 Cost of goods sold (4,500 units × $82) (369,000 ) Gross margin 364,500 Sales commissions (5% of sales) (36,675 ) Administrative salaries expense (85,000 ) Advertising expense (34,000 ) Depreciation expense (48,000 ) Shipping and handling expenses (4,500 units × $3) (13,500 ) Net income $ 147,325 Required Reconstruct the income statement using the contribution margin format. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Benson will earn if sales increase by 20 percent.
Keep-or-Drop Decision Charlevoix Company produces three products: Torch, Elk, and Walloon. A segmented income statement, with amounts given in thousands, follows: Line Item Description Torch Elk Walloon Total Sales revenue $1,280 $185 $315 $1,780 Less: Variable expenses 1,115 45 252 1,412 Contribution margin $165 $140 $63 $368 Less direct fixed expenses: Depreciation 50 15 10 75 Advertising 95 85 76 256 Segment margin $20 $40 $(23) $37 Direct fixed expenses consist of depreciation and advertising. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold. Assume that, each of the three products has a different marketing campaign whose advertising would be eliminated if the associated product were dropped. Assume that 30% of the Torch customers choose to buy from Charlevoix because it offers a full range of products, including Walloon. If Walloon were no longer available from Charlevoix, these customers…
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Current Attempt in Progress Some financial information for each of three companies is reflected below in columns A, B, and C. Use your knowledge of CVP relationships to fill in the missing pieces numbered (1) through (9). Consider each company (i.e., column) separately. (Round variable cost per unit and contribution margin ratio to 2 decimal places, e.g. 0.24.) Selling price Total fixed costs Sales volume (units) Variable cost/unit Operating income Tax rate After-tax profit Contribution margin ratio A $6 $13,100 29,000 $40,840 (1) % (2) $28,588 (3) B $800 2,500 $384 25% $684,375 (4) (5) (6) с $389,000 $30.24 $229,240 40% 0.64
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Exercise 18 -8 (Static) Computing missing amounts in contribution margin income statements LO A1 Compute the missing amounts in the contribution income statement shown below: (Round "Per Unit" answers to 2 decimal places.) \table[[Number of units sold, Company A, Company B], [,,,, 1,975, ], [,, otal,,unit, Total, Per unit], [Sales, $, 208, 000, $, 65.00,, ], [Variable costs,, 150, 400,,, 39, 500, ], [Contribution margin,,,,, 43, 450, ], [Fixed costs,,,,,19, 750, ], [ Income, $, 46, 400,,,,]]