Contribution Margin Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin. To Determine: The contribution margin and contribution margin ratio for each segment of Incorporation TW.

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Answer 1

Question

Chapter 20, Problem 20.16EX

(a)

To determine

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The contribution margin and contribution margin ratio for each segment of Incorporation TW.

(b)

To determine

To Describe: The contribution margin ratio for the publishing department is smaller than compared to the other segments.

(c)

To determine

To Identify: Does your answer to (b) mean that the other segments are more profitable businesses than the publishing department.

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KIARA LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: ASSETS Property, plant and equipment (cost) Accumulated depreciation Long-term investments Inventory Accounts receivable Company tax paid in advance Bank EQUITY AND LIABILITIES 2024 2023 R R 2 490 000 1 620 000 (630 000) 660 000 1 050 000 1 230 000 30 000 (480 000) 450 000 1 290 000 900 000 0 750 000 660 000 5 580 000 4 440 000 Ordinary share capital 2 700 000 2 000 000 Retained income 1 500 000 1 158 000 Long-term loan from Kip Bank (15%) 900 000 1 000 000 Accounts payable 480 000 228 000 Company tax payable 0 54 000 5 580 000 4 440 000 ADDITIONAL INFORMATION All purchases and sales are on credit. Interim dividends paid during the year amounted to R150 750. Credit terms of 3/10 net 60 days are granted by creditors.

Accounting Question

REQUIRED Study the information given below and answer the following questions. Where discount factors are required use only the four decimals present value tables that appear after the formula sheet or in the module guide. Ignore taxes. 5.1 Calculate the Accounting Rate of Return on average investment of the second alternative (expressed to two decimal places). 5.2 Determine which of the two investment opportunities the company should choose by calculating the Net Present Value of each alternative. Your answer must include the calculation of the present values and NPV. 5.3 Calculate the Internal Rate of Return of the first alterative (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION The management of Bentall Incorporated is considering two investment opportunities: (5 marks) (9 marks) (6 marks) The first alternative involves the purchase of a new machine for R900 000 which…

Answer 2

Question

Chapter 20, Problem 20.16EX

(a)

To determine

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The contribution margin and contribution margin ratio for each segment of Incorporation TW.

(b)

To determine

To Describe: The contribution margin ratio for the publishing department is smaller than compared to the other segments.

(c)

To determine

To Identify: Does your answer to (b) mean that the other segments are more profitable businesses than the publishing department.

Expert Solution & Answer

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Answer 3

Question

Chapter 20, Problem 20.16EX

(a)

To determine

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The contribution margin and contribution margin ratio for each segment of Incorporation TW.

(b)

To determine

To Describe: The contribution margin ratio for the publishing department is smaller than compared to the other segments.

(c)

To determine

To Identify: Does your answer to (b) mean that the other segments are more profitable businesses than the publishing department.

Expert Solution & Answer

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Answer 4

Question

Chapter 20, Problem 20.16EX

(a)

To determine

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The contribution margin and contribution margin ratio for each segment of Incorporation TW.

(b)

To determine

To Describe: The contribution margin ratio for the publishing department is smaller than compared to the other segments.

(c)

To determine

To Identify: Does your answer to (b) mean that the other segments are more profitable businesses than the publishing department.

Expert Solution & Answer

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Answer 5

Chapter 20, Problem 20.16EX

(a)

To determine

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The contribution margin and contribution margin ratio for each segment of Incorporation TW.

(b)

To determine

To Describe: The contribution margin ratio for the publishing department is smaller than compared to the other segments.

(c)

To determine

To Identify: Does your answer to (b) mean that the other segments are more profitable businesses than the publishing department.

Answer 6

Chapter 20, Problem 20.16EX

(a)

To determine

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The contribution margin and contribution margin ratio for each segment of Incorporation TW.

Answer 7

Chapter 20, Problem 20.16EX

(a)

To determine

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The contribution margin and contribution margin ratio for each segment of Incorporation TW.

Answer 8

(b)

To determine

To Describe: The contribution margin ratio for the publishing department is smaller than compared to the other segments.

Answer 9

(b)

To determine

To Describe: The contribution margin ratio for the publishing department is smaller than compared to the other segments.

Answer 10

(c)

To determine

To Identify: Does your answer to (b) mean that the other segments are more profitable businesses than the publishing department.

Answer 11

(c)

To determine

To Identify: Does your answer to (b) mean that the other segments are more profitable businesses than the publishing department.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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Solution Summary: The author calculates the contribution margin for each segment of Incorporation TW by deducting variable cost from sales or selling and administrative expenses.

To Describe: The contribution margin ratio for the publishing department is smaller than compared to the other segments.

To Identify: Does your answer to (b) mean that the other segments are more profitable businesses than the publishing department.

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