BwJKVHZUM123 Corporation has two departments, Toys and Candy. The company's most recent monthly contribution format Income statement follows:SalesVarlable expensesContribution MarginFixed ExpensesNet operating Income (loss)(ID#79893)(Baruch College - No assistance allowed.)Multiple ChoiceTotalOOCandy$4,200,000 $3,000,000 $1,200,0002,000,0001,500,000500,0002,200,0001,500,000700,0002,200,0001,300,000900,000(200,000)200,000Q) If the Candy Department is dropped, what will be the effect on the net operating Income of the KVHZUM123 Corporation as a whole?OA KVHZUM123's study indicates that $200,000 of the fixed expenses being charged to the Candy Department are sunk costs or allocated costs that will continue even if the Candy Department is dropped. In addition, the elimination of the Candy Departmentwill result in a 20% decrease in the sales of the Toys Department.Decrease by $260,0000Increase by $340,000DepartmentToysDecrease by $340,000Decrease by $300,000< Prev4 of 20lyNext >elp08Save & Exit SQQ

NOI stands for net operating income refers to the measure that is used for analysing the…

Answered: KVHZUM123 Corporation has two…

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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Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Department A $ 350,000 120,000 230,000 140,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Multiple Choice O $(133,800) The company says that $110,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 6%. What is the financial advantage (disadvantage) of discontinuing Department B? O $(128,000) $(113,800) Total $ 800,000 320,000 480,000 400,000 $ 80,000 O $(124,000) Department B $ 450,000 200,000 250,000 260,000 $90,000 $ (10,000)
The contribution format income statement for Huerra Company for last year is given below. Total $1,006,000 603,600 Unit $ 50.30 30.18 402,400 20.12 322,400 16.12 Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 40% Net income 80,000 32,000 $ 48,000 4.00 1.60 $2.40 The company had average operating assets of $502,000 during the year. Required: 1. Compute the company's margin, turnover, and return on investment (ROI) for the period. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $93,000. 3. The company achieves a cost savings of $7,000 per year by using less costly materials. 4. The company…
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Total Department Hardware Linens Sales $4,200,000 $3,090,000 $1,110,000 Variable expenses 1,240,000 840,000 400,000 Contribution margin 2,960,000 2,250,000 710,000 Fixed expenses 2,300,000 1,470, 000 830,000 Net operating income (loss) $ 660,000 $ 780,000 $ (120,000) A study indicates that $379,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 11% decrease in the sales of the Hardware Department. Required: What is the financial advantage ( disadvantage) of discontinuing the Linens Department?
Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Total Department A Department B $ 800,000 350,000 450,000 $ 350,000 250,000 Sales $ 450,000 Variable expenses Contribution margin 100,000 100,000 350,000 Fixed expenses 400,000 140,000 260,000 Net operating income (loss) $ 50,000 $ (40,000) $ 90,000 The company says that $60,000 of the fixed expenses being charged to Department A are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department A is discontinued the sales in Department B will drop by 18%. What is the financial advantage (disadvantage) of discontinuing Department A? Multiple Choice $(103,000) $(83,000) $(92,000) $(101,000)
Submit A retailer has two departments-Home and Garden. The company's most recent contribution format income statement follows: Total Home Garden Sales $৪00, 000 $350,000 $450,000 Variable expenses 320,000 120,000 200,000 Contribution margin Fixed expenses 480,000 230,000 250,000 400,000 140,000 260,000 35:51 Net operating income (1loss) $ 80,000 $ 90,000 $(10,000) The retailer is considering whether It should close the Garden Department. Further analysis revealed that, of the fixed expenses being charged to the Garden Department, $140,000 are sunk costs or allocated costs that will continue If Garden is discontinued. In addition, If the Garden Department is discontinued, sales in the Home Department will drop by 5%. How much does the company's profit increase or decrease if the Garden Department is discontinued? (If a decrease, the dollar amount is indicated in parentheses, ie., $ (1,000).) Multiple Cholce $ (124,000) O Quiz $ (161,500) 1009
Last year’s contribution format income statement for Huerra Company is given below: Total Unit Sales $ 1,002,000 $ 50.10 Variable expenses 601,200 30.06 Contribution margin 400,800 20.04 Fixed expenses 316,800 15.84 Net operating income 84,000 4.20 Income taxes @ 40% 33,600 1.68 Net income $ 50,400 $ 2.52 The company had average operating assets of $491,000 during the year. Required: 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. Using Lean Production, the company is able to reduce the average level of inventory by $100,000. The company achieves a cost savings of $10,000 per year by using less costly materials. The company purchases machinery and equipment that increase average operating assets by $125,000.…
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Fixed expenses Contribution margin Net operating income (loss) 1,307,000 Department Total $ 4,210,000 Hardware $ 3,040,000 Linens $ 1,170,000 403,000 767,000 840,000 $ (73,000) 2,903,000 2,290,000 $ 613,000 904,000 2,136,000 1,450,000 $ 686,000 A study indicates that $379,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 15% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)
CVP Analysis, *What IT?" AnalysisKevin Co. projected contribution-format income statement for the upcoming month is shownBelow Sales (500 units) $10000Variable expenses. 4000Contributions margin. 6000Fixed expenses. 1000Net operating income. 5000Required:a.) Compute the breakeven point in units.b) Compute the breakeven paint in dollars.c.) If the company wishes to earn a monthly target profit of $10,000, how many units must be sold each month?d.) Compute the company's margin of safety. State your answer in both dollar and percentage terms,e.) The company's manager thinks that adding a salaried sales staff member at a cost of 52,000 per month will increase sales by $4,000 per month. If he is correct, what will be the net dollar advantage or disadvantage of making this change?t.) Refer to the original data, the company's manager believes that a new production process will improve profitability. He plans to add new machinery that will cut variable expenses…
Tike Industries is an apparel company that makes and sells both casual wear and sportswear. Here are data for the current year: Sales revenue Variable costs Contribution margin Traceable fixed costs Segment margin Common fixed costs Operating income Total $ 1,000,000 745,000 $255.000 (80,000) $175,000 (90,000) $85,000 Casual wear $ 450,000 388,000 $62,000 (25,000) $37,000 (42,000) S(5,000) Sportswear 5 pts $ 550,000 357,000 $193,000 (55,000) $138,000 (48,000) $90,000 Tike's accountant allocated the common fixed costs between the product lines based on sales revenue. Tike plans to discontinue the production of casual wear and use the freed-up capacity to triple the production and sale of sportswear. Although this will eliminate the traceable fixed costs for casual wear, the traceable fixed costs for sportswear will double. If Tike discontinues the casual wear product line, what would be the amount of the increase in Tike's operating income? Round to the nearest whole dollar and do not…
Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (7,600 unita) Variable expenses Total $ 243,200 136, 800 Per Unit $32.00 18.00 Contribution nargin 106,400 $ 14.00 ried expenses 55,000 5 51,400 et operating Lncone Required: (Consider each case independently): 1 What would be the revised net operating income per month if the sales volume increases by 50 units? 2 What would be the revised net operating income per month if the sales volume decreases by 50 units? 3. What would be the revised net operating income per month if the sales volume is 6,600 units? 1. Revined net operating income 2. Revised net operating income 3. Revised net operating income
Whirly Corporation's contribution format income statement for the most recent month is shown below: Per Unit $ 32.00 19.00 $13.00 Sales (8,300 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 265,600 157,700 Required: (Consider each case independently): 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income 8 $ 107,900 55,200 $ 52,700 1. What would be the revised net operating income per month if the sales volume increases by 80 units? 2. What would be the revised net operating income per month if the sales volume decreases by 80 units? 3. What would be the revised net operating income per month if the sales volume is 7,300 units?
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,310,000 1,313,000 2,997,000 2,200,000 $ 797,000 Department Hardware $ 3,130,000 901,000 2,229,000 1,360,000 $ 869,000 Linens $ 1,180,000 412,000 768,000 840,000 $ (72,000) A study indicates that $377,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 11% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)

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