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Keep or Drop AudioMart is a retailer of radios, stereos, and televisions. The store carries two portable sound systems that have radios, tape players, and speakers. System A, of slightly higher quality than System B, costs $21 more. With rare exceptions, the store also sells a headset when a system is sold. The headset can be used with either system. Variable-costing income statements for the three products follow: System A System B $45,300 Sales Less: Variable expenses Contribution margin Less: Fixed costs * 20,300 $25,000 Operating income (loss) 10,200 $32,100 $14,800 25,000 $7,100 18,000 Headset $8,400 Mark 3,700 $(10,900) *This includes common fixed costs totaling $18,000, allocated to each product in proportion to its revenues. The owner of the store is concerned about the profit performance of System B and is considering dropping it. If the product is dropped, sales of System A will increase by 32%, and sales of headsets will drop by 25%. Round all answers to the nearest whole number. Required: $4,700 2,400 $2,300 1. Prepare segmented income statements for the three products. Round your answers to the nearest dollar. Input expenses as positive numbers.

Keep or Drop AudioMart is a retailer of radios, stereos, and televisions. The store carries two portable sound systems that have radios, tape players, and speakers. System A, of slightly higher quality than System B, costs $21 more. With rare exceptions, the store also sells a headset when a system is sold. The headset can be used with either system. Variable-costing income statements for the three products follow: System A System B $45,300 Sales Less: Variable expenses Contribution margin Less: Fixed costs * 20,300 $25,000 Operating income (loss) 10,200 $32,100 $14,800 25,000 $7,100 18,000 Headset $8,400 Mark 3,700 $(10,900) *This includes common fixed costs totaling $18,000, allocated to each product in proportion to its revenues. The owner of the store is concerned about the profit performance of System B and is considering dropping it. If the product is dropped, sales of System A will increase by 32%, and sales of headsets will drop by 25%. Round all answers to the nearest whole number. Required: $4,700 2,400 $2,300 1. Prepare segmented income statements for the three products. Round your answers to the nearest dollar. Input expenses as positive numbers.

FINANCIAL ACCOUNTING
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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### AudioMart Segmented Income Statement Overview In this exercise, we analyze the segmented income statement for three products: System A, System B, and Headset. This statement helps us understand the financial performance of each segment and the overall business. The numbers are rounded to the nearest dollar, and expenses are recorded as positive values. #### Income Statement Breakdown 1. **Sales:** - System A: $45,300 - System B: $32,100 - Headset: $8,400 - **Total Sales:** $85,800 2. **Less: Variable Expenses:** - System A: $20,300 - System B: $25,000 - Headset: $3,700 - **Total Variable Expenses:** $49,000 3. **Contribution Margin:** (Sales - Variable Expenses) - System A: $25,000 - System B: $7,100 - Headset: $4,700 - **Total Contribution Margin:** $36,800 4. **Less: Direct Fixed Cost:** - System A: $7,800 - System B: $18,000 - Headset: $2,400 - **Total Direct Fixed Cost:** $30,600 5. **Segment Margin:** (Contribution Margin - Direct Fixed Cost) - System A: $14,800 - System B: $10,900 - Headset: Not provided 6. **Less: Common Fixed Cost** and **Operating Income** are not filled in the table for this exercise, indicating that these calculations are likely meant to be part of learner engagement or further assignments. This segmented income statement allows businesses to evaluate the profitability of each product line and make informed strategic decisions. By analyzing each segment separately, managers can identify which products are driving the most profit and which may need restructuring or resource reallocation.
Transcribed Image Text:### AudioMart Segmented Income Statement Overview In this exercise, we analyze the segmented income statement for three products: System A, System B, and Headset. This statement helps us understand the financial performance of each segment and the overall business. The numbers are rounded to the nearest dollar, and expenses are recorded as positive values. #### Income Statement Breakdown 1. **Sales:** - System A: $45,300 - System B: $32,100 - Headset: $8,400 - **Total Sales:** $85,800 2. **Less: Variable Expenses:** - System A: $20,300 - System B: $25,000 - Headset: $3,700 - **Total Variable Expenses:** $49,000 3. **Contribution Margin:** (Sales - Variable Expenses) - System A: $25,000 - System B: $7,100 - Headset: $4,700 - **Total Contribution Margin:** $36,800 4. **Less: Direct Fixed Cost:** - System A: $7,800 - System B: $18,000 - Headset: $2,400 - **Total Direct Fixed Cost:** $30,600 5. **Segment Margin:** (Contribution Margin - Direct Fixed Cost) - System A: $14,800 - System B: $10,900 - Headset: Not provided 6. **Less: Common Fixed Cost** and **Operating Income** are not filled in the table for this exercise, indicating that these calculations are likely meant to be part of learner engagement or further assignments. This segmented income statement allows businesses to evaluate the profitability of each product line and make informed strategic decisions. By analyzing each segment separately, managers can identify which products are driving the most profit and which may need restructuring or resource reallocation.
### Keep or Drop AudioMart is a retailer of radios, stereos, and televisions. The store carries two portable sound systems that have radios, tape players, and speakers. System A, of slightly higher quality than System B, costs $21 more. With rare exceptions, the store also sells a headset when a system is sold. The headset can be used with either system. Variable-costing income statements for the three products follow: | | System A | System B | Headset | |----------------|----------|-----------|---------| | **Sales** | $45,300 | $32,100 | $8,400 | | **Less: Variable expenses** | 20,300 | 25,000 | 3,700 | | **Contribution margin** | $25,000 | $7,100 | $4,700 | | **Less: Fixed costs \*** | 10,200 | 18,000 | 2,400 | | **Operating income (loss)** | $14,800 | $(10,900) | $2,300 | \* This includes common fixed costs totaling $18,000, allocated to each product in proportion to its revenues. The owner of the store is concerned about the profit performance of System B and is considering dropping it. If the product is dropped, sales of System A will increase by 32%, and sales of headsets will drop by 25%. Round all answers to the nearest whole number. **Required:** 1. Prepare segmented income statements for the three products. Round your answers to the nearest dollar. Input expenses as positive numbers.
Transcribed Image Text:### Keep or Drop AudioMart is a retailer of radios, stereos, and televisions. The store carries two portable sound systems that have radios, tape players, and speakers. System A, of slightly higher quality than System B, costs $21 more. With rare exceptions, the store also sells a headset when a system is sold. The headset can be used with either system. Variable-costing income statements for the three products follow: | | System A | System B | Headset | |----------------|----------|-----------|---------| | **Sales** | $45,300 | $32,100 | $8,400 | | **Less: Variable expenses** | 20,300 | 25,000 | 3,700 | | **Contribution margin** | $25,000 | $7,100 | $4,700 | | **Less: Fixed costs \*** | 10,200 | 18,000 | 2,400 | | **Operating income (loss)** | $14,800 | $(10,900) | $2,300 | \* This includes common fixed costs totaling $18,000, allocated to each product in proportion to its revenues. The owner of the store is concerned about the profit performance of System B and is considering dropping it. If the product is dropped, sales of System A will increase by 32%, and sales of headsets will drop by 25%. Round all answers to the nearest whole number. **Required:** 1. Prepare segmented income statements for the three products. Round your answers to the nearest dollar. Input expenses as positive numbers.
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