Show-Off, Inc., sells merchandise through three retail outlets-in Las Vegas, Reno, and Sacramento-and operates a general corporate headquarters in Reno. A review of the company's Income statement Indicates a record year in terms of sales and profits. Management, though, desires additional Insights about the Individual stores and has asked that Judson Wyatt, a newly hired Intern, prepare a segmented Income statement. The following Information has been extracted from Show-Off's accounting records: ⚫ The sales volume, sales price, and purchase price data follow: Sales volume Unit selling price Unit purchase price Las Vegas 37,400 units Reno $ 22.00 10.25 41,400 units $ 20.50 10.25 Sacramento 46,160 units $ 18.25 12.00 • The following expenses were incurred for sales commissions, local advertising, property taxes, management salaries, and other noncontrollable (but traceable) costs: Sales commissions Las Vegas 8% Reno 8% Sacramento 8% Local advertising $16,900 Local property taxes Sales manager salary 6,950 $35,000 3,200 $84,000 10,200 54,000 Store manager salaries 48,500 62,500 65,000 Other noncontrollable costs 9,100 7,100 30,700 Local advertising decisions are made at the store manager level. The sales manager's salary in Sacramento is determined by the Sacramento store manager; In contrast, store manager salaries are set by Show-Off's vice president. • Nontraceable fixed corporate expenses total $308,450. • The company uses a responsibility accounting system. Required: 1. Assume the role of Judson Wyatt and prepare a segmented Income statement for Show-Off. 2. Identify the probable causes for the poor performance of the weakest store. 3. Which of the following should be reviewed in evaluating the performance of the store manager?
Show-Off, Inc., sells merchandise through three retail outlets-in Las Vegas, Reno, and Sacramento-and operates a general corporate headquarters in Reno. A review of the company's Income statement Indicates a record year in terms of sales and profits. Management, though, desires additional Insights about the Individual stores and has asked that Judson Wyatt, a newly hired Intern, prepare a segmented Income statement. The following Information has been extracted from Show-Off's accounting records: ⚫ The sales volume, sales price, and purchase price data follow: Sales volume Unit selling price Unit purchase price Las Vegas 37,400 units Reno $ 22.00 10.25 41,400 units $ 20.50 10.25 Sacramento 46,160 units $ 18.25 12.00 • The following expenses were incurred for sales commissions, local advertising, property taxes, management salaries, and other noncontrollable (but traceable) costs: Sales commissions Las Vegas 8% Reno 8% Sacramento 8% Local advertising $16,900 Local property taxes Sales manager salary 6,950 $35,000 3,200 $84,000 10,200 54,000 Store manager salaries 48,500 62,500 65,000 Other noncontrollable costs 9,100 7,100 30,700 Local advertising decisions are made at the store manager level. The sales manager's salary in Sacramento is determined by the Sacramento store manager; In contrast, store manager salaries are set by Show-Off's vice president. • Nontraceable fixed corporate expenses total $308,450. • The company uses a responsibility accounting system. Required: 1. Assume the role of Judson Wyatt and prepare a segmented Income statement for Show-Off. 2. Identify the probable causes for the poor performance of the weakest store. 3. Which of the following should be reviewed in evaluating the performance of the store manager?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Show-Off, Inc., sells merchandise through three retail outlets-in Las Vegas, Reno, and Sacramento-and operates a general corporate
headquarters in Reno. A review of the company's Income statement Indicates a record year in terms of sales and profits. Management,
though, desires additional Insights about the Individual stores and has asked that Judson Wyatt, a newly hired Intern, prepare a
segmented Income statement. The following Information has been extracted from Show-Off's accounting records:
⚫ The sales volume, sales price, and purchase price data follow:
Sales volume
Unit selling price
Unit purchase price
Las Vegas
37,400 units
Reno
$ 22.00
10.25
41,400 units
$ 20.50
10.25
Sacramento
46,160 units
$ 18.25
12.00
• The following expenses were incurred for sales commissions, local advertising, property taxes, management salaries, and other
noncontrollable (but traceable) costs:
Sales commissions
Las Vegas
8%
Reno
8%
Sacramento
8%
Local advertising
$16,900
Local property taxes
Sales manager salary
6,950
$35,000
3,200
$84,000
10,200
54,000
Store manager salaries
48,500
62,500
65,000
Other noncontrollable costs
9,100
7,100
30,700
Local advertising decisions are made at the store manager level. The sales manager's salary in Sacramento is determined by the
Sacramento store manager; In contrast, store manager salaries are set by Show-Off's vice president.
• Nontraceable fixed corporate expenses total $308,450.
• The company uses a responsibility accounting system.
Required:
1. Assume the role of Judson Wyatt and prepare a segmented Income statement for Show-Off.
2. Identify the probable causes for the poor performance of the weakest store.
3. Which of the following should be reviewed in evaluating the performance of the store manager?
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