Operating results for Division A of Alpha Company during 2019 are as follows: Sales $560,000 Cost of goods sold 347,200 Gross profit Direct expenses Common expenses Total expenses Net income 212,800 37,800 63,000 100,800 $112,000 If Division A would maintain the same quantity of product sold while raising selling prices by 14.000000000000002%, increasing direct labor costs by $28,000 and implementing a new marketing campaign at a cost of $14,000, what would be the effect on the Division's net income? (Ignore income taxes in your calculations.) Select one: O a. Net income would increase by $36,400 O b. Net income would increase by $28,000 O c. Net income would decrease by $36,400 O d. Net income would increase by $42,000 O e. None of these options are correct.

Operating results for Division A of Alpha Company during 2019 are as follows: Sales $560,000 Cost of goods sold 347,200 Gross profit Direct expenses Common expenses Total expenses Net income 212,800 37,800 63,000 100,800 $112,000 If Division A would maintain the same quantity of product sold while raising selling prices by 14.000000000000002%, increasing direct labor costs by $28,000 and implementing a new marketing campaign at a cost of $14,000, what would be the effect on the Division's net income? (Ignore income taxes in your calculations.) Select one: O a. Net income would increase by $36,400 O b. Net income would increase by $28,000 O c. Net income would decrease by $36,400 O d. Net income would increase by $42,000 O e. None of these options are correct.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

What was the division’s ROI for the year?
2. The Gustavo Industries in São Paulo, Brazil, reported the following results for 2020 (currency in Brazilian real, R$):« Sales R$ 400,000,000- 320,000,000- 40,800,000- 280,000,000- Variable costs Controllable fixed costs Average operating assets Gustavo's Management is considering the following independent courses of action in 2021 in order to maximize the return on investment for this division: Option1: Reduce average operating assets by R$ 80,000,000 with no change in controllable margin. Option2: Increase sales R$ 80,000,000 with no change in the contribution margin percentage. A. Compute the controllable margin and the return on investment for 2020. (25%)- B. Compute the controllable margin and the expected return on investment for each proposed option. (25%)-
Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A B C Sales $ 330,000 $ 480,000 $ 500,000 Cost of goods sold (242,000 ) (184,000 ) (190,000 ) Sales commissions (30,000 ) (44,000 ) (44,000 ) Contribution margin 58,000 252,000 266,000 General fixed operating expenses (allocation of president’s salary) (92,000 ) (92,000 ) (92,000 ) Advertising expense (specific to individual divisions) (6,000 ) (20,000 ) 0 Net income (loss) $ (40,000 ) $ 140,000 $ 174,000 Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising…
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)
Analyzing Operational ChangesOperating results for department B of Delta Company during 2016 are as follows: Sales $550,000 Cost of goods sold 378,000 Gross profit 172,000 Direct expenses 120,000 Common expenses 66,000 Total expenses 186,000 Net loss $(14,000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 15% and making an additional advertising expenditure of $60,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 15%, the effect on net income (loss) would be $______
I want the get the solution from requirement a to e
Please Provide Answer with Full explanation and provide it Step by step
Analyzing Operational ChangesOperating results for department B of Shaw Company during 2019 are as follows: Sales $800,000 Cost of goods sold 480,000 Gross profit 320,000 Direct expenses 200,000 Common expenses 123,000 Total expenses 323,000 Net loss $(3,000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 6% and making an additional advertising expenditure of $40,000, what would be the effect on the department’s net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 6%, the effect on net income (loss) would be $Answer
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)
Elmer's Electronics has the following information for the first three years of business: 2019 10,000 2020 11,000 3,000 $600,000 2021 12,000 8,000 S600,000 S 100 S 220 Units sold Units produced Fixed production costs Variable production costs per unit Selling price per unit Fixed selling & administrative expense 25,000 $600,000 $ 100 $ 200 $200,000 100 $ 210 $200,000 $200,000 Calculate income under both full costing and variable costing. What is the cost of ending inventory under full costing and under variable costing (assume FIFO)?
The following are selected data for the division for the consumer products of ABC Corp for 2019: Sales 50,000,000 Average invested capital (assets) 20,000,000 Net income 2,000,000 Cost of capital 8% What is the return on investment for the division? 2% 4% 8% 10% Group of answer choices 1 2 3 4
st ↑ Ainsley Corporation has four operating divisions. The budgeted revenues and expenses for each division for 2020 follows: Closing down any division would result in savings of 40% of the fixed costs of that division. Top management is very concerned about the unprofitable divisions (A and B) and is considering closing them for the year. (Click to view the results of each division.) Read the requirements. Requirement 1. Calculate the increase or decrease in operating income if Ainsley closes division A. Begin by calculating Division A's contribution margin. Sales Contribution margin Requirements 1. Calculate the increase or decrease in operating income if Ainsley closes division A. Division A 2. Calculate the increase or decrease in operating income if Ainsley closes division B. 3. What other factors should the top management of Ainsley consider before making a decision? Print Done X Data table Sales Cost of goods sold Selling, general, and administrative expenses Operating…