Empire Records divides its operations into three divisions. The company CEO noticed that its North American division is underperforming and is trying to decide if this division should be eliminated. A recent income statement for its North American division is asfollows:Empire RecordsNorth American DivisionIncome StatementRevenueDivisions sales commissionsSalary of the division presidentLease cost for division retail storesAllocation of company-wide legal cost*Net loss*This cost relates to a legal settlement paid by Empire Records during the year.Required:a. Prepare an income statement containing only the relevant information to the segment elimination decision.b. Based on the income statement you prepared in Requirement a, should this division be eliminated?Complete this question by entering your answers in the tabs below.Required A Required B$570,000(353,000)(25,700)(119,000)(77,000)(4,700)Prepare an income statement containing only the relevant information to the segment elimination decision.EMPIRE RECORDSNorth American DivisionIncome StatementRequired ARequired B >

To decide if a division must continue or be eliminated, the relevant cost and revenue must be…

g and is trying to decide if this division should be eli Empire Records North American Division Income Statement ons sales commissions of the division president cost for division retail stores ion of company-wide legal cost* S $570, E (353,06 (25,76 (119,06 (77,06 (4,76 relates to a legal settlement paid by Empire Record

g and is trying to decide if this division should be eli Empire Records North American Division Income Statement ons sales commissions of the division president cost for division retail stores ion of company-wide legal cost* S $570, E (353,06 (25,76 (119,06 (77,06 (4,76 relates to a legal settlement paid by Empire Record

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 16E: A multinational corporation has a number of divisions, two of which are the North American Division...

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The ABC Corporation has two divisions-East and West The divisions have the following revenues and expenses Sales Variable costs Traceable fixed costs Allocated common corporate costs Net operating income (loss) Muple Choice $141400 The management of ABC is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided Total common corporate costs would be unaffected by this decision Geven these data, the elimination of the West Division would result in an overall company net operating income foss) of $45.600) $1400 East $ 595,000 $140,000) 180,000 144,000 129,600 $141,400 West $ 445,500 236,500 203,400 187,000 $ (181,400) a
Owen Audio shows the following information for its two divisions for year 1. Commercial Division. Consumer Division $ 1,879,2001 1,127,520 293,400 $ 5,950,800 3,797,100 366,840 130,680 413,820 Sales revenue Cost of sales Selling, General and Administrative Allocated corporate overhead Required: a. Compute divisional operating income for the two divisions. Ignore taxes. b-1. What are the gross margin and operating margin percentages for both divisions? b-2. How well have these divisions performed? Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Compute divisional operating income for the two divisions. Ignore taxes. Consumer Division Commercial Division Operating income
The Cook Corporation has two divisions-East and West. The divisions have the following revenues and expenses. East West $ 489,500 258,500 $ 550,000 198,000 169,500 117,500 194,400. 141, 100 $ 65,000 $ (104,500) Sales Variable costs Traceable fixed costs Allocated common corporate costs. Net operating income (loss) The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be voided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the West Division would result in am verall company net operating income (loss) of: Multiple Choice O $(76,100) $(39,500) $65,000 $(104,500)
A company has two divisions-Lawrence and Lowell. The divisions have the following revenues and expenses: Lawrence $ 570,000 238,000 172,500 128,300 $ 31,200 Sales Variable costs Traceable fixed costs Allocated common corporate costs Net operating income (loss) Multiple Choice The management of the company is considering the elimination of the Lowell Division. If the Lowell Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the Lowell Division would result in an overall company net operating income (loss) of $31.200 Lowell $ 478,500 327,300 $(132,000) 147,600 163,200 $ (159,600)
PROBLEM 13-26 Finely Segmented Income Statements [LO1] Companhia Bradesco, S.A., of Brazil, an industrial supply store chain, has two divisions. The company's contribution format income statement segmented by divisions for last year is given below (the currency in Brazil is the real, denoted here by R): Total Division Company Plastics Glass Sales. Variable expenses R1,500,000 700,000 R900,000 400,000 R600,000 300,000 Contribution margin . 800,000 500,000 300,000 Traceable fixed expenses: Advertising. Depreciation 300,000 140,000 220,000 180,000 92,000 118,000 120,000 48,000 102,000 Administration. Total.... 660,000 390,000 270,000 R 30,000 Divisional segment margin. Common fixed expenses 140,000 100,000 R110,000 Net operating income.. R 40,000 Top management doesn't understand why the Glass Division has such a low segment mar- gin when its sales are only one-third less than sales in the Plastics Division. Accordingly, man- agement has directed that the Glass Division be further…
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The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses: Sales Variable costs Traceable fixed costs Allocated common corporate costs Net operating income (loss) East $ 550,000 West $489,500 198,000 169,500 117,500 $ 65,000 258,500 194,400 141,100 $ (104,500) The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the West Division would result in an overall company net operating income (loss) of: Multiple Choice $65,000 $(104,500) $(39,500) О $(76,100)
Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Operating income Operating assets Retail Division $ 7,200,000 $37,200,000 Wholesale Division $ 3,700,000 $17,200,000 Assuming that these are the only divisions of Terra Company, what is the ROI for the company as a whole?
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Owen Audio shows the following information for its two divisions for year 1. Commercial Division Sales revenue Cost of sales Consumer Division $ 1,840,800 1,104,480 $ 5,829,200 3,781,100 Selling, General and Administrative Allocated corporate overhead 277,400 350,840 128,760 407,740 Required: a. Compute divisional operating income for the two divisions. Ignore taxes. b-1. What are the gross margin and operating margin percentages for both divisions? b-2. How well have these divisions performed?
Subject: accounting