Total 500,000 Division 1 Division 2 Sales 300,000 200,000 Variable Expenses Contribution Margin Traceable Fixed Exp. 345.000 225.000 75,000 55.000 120.000 80,000 40.000 40,000 155,000 Segment Margin Common Fixed Expenses 95,000 60,000 25,000 20,000 Net Income 35,000 Average Operating Assets Minimum Acceptable ROI 250,000 400,000 7% 7% Requirements: 1. Calculate Breakeven in Sales Dollars for the Total Company, Division 1, and Division 2. 2. Refer to the original information. If sales in Division 2 increase by $30,000 and traceable fixed costs increase by $7,000, by how much will overall company net income increase/(decrease)? 3. Refer to the original information. Assume that in May, sales in Division 1 are expected to remain at $300,000 but sales in Division 2 are expected to decline to $150,000. What is the new weighted average CM Ratio?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Segment Margin is Net Operating Income
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