Question 9.11When Rosana, CFO of Hydie Inc., first evaluated the segmented income statement below, he flew into his usual rage:"When are we having losses in our product lines, I would rather eliminate them."Product LinesTotalUVS75,000$47,000$28,000Sales$250,000$100,000$75,000$35.000$40,000$37,000Variable expenses$119,000$37,500Contribution margin$130,500$62,500Traceable fixed expenses*$98,000$31,000$30,000$32.900$400$4,400S(6,400)Common expenses, allocated$18,000$10,500Operating income (loss)$13.500S17.500)*These traceable expenses could be eliminated if the product lines to which they are traced were discontinued.Required:Recommend which segments, if any, should be eliminated. Prepare a report in good form to support your answer. Show allthe necessary calculations.

Management accounting is widely used by the management, government, and individuals to make various…

1When Rosana, CFO of Hydie Inc., first evaluated the segmented income statement below, he flew into his usual rage: "When are we having losses in our product lines, I would rather eliminate them." Product Lines Total U V $100,000 $37.500 Sales $250,000 $75,000 $75,000 $35.000 $40,000 $37,000 $47,000 $28,000 Variable expenses $119.000 Contribution margin $130,500 S62,500 Traceable fixed expenses* $98,000 $31,000 $30,000 Common expenses, allocated $32,900 $18.000 $10,500 $4.400 Operating income (loss) -$400 $13,500 SI7.500) $16,400) *These traceable expenses could be eliminated if the product lines to which they are traced were discontinued. Required: Recommend which segments, if any, should be eliminated. Prepare a report in good form to support your answer. Show all the necessary calculations.

1When Rosana, CFO of Hydie Inc., first evaluated the segmented income statement below, he flew into his usual rage: "When are we having losses in our product lines, I would rather eliminate them." Product Lines Total U V $100,000 $37.500 Sales $250,000 $75,000 $75,000 $35.000 $40,000 $37,000 $47,000 $28,000 Variable expenses $119.000 Contribution margin $130,500 S62,500 Traceable fixed expenses* $98,000 $31,000 $30,000 Common expenses, allocated $32,900 $18.000 $10,500 $4.400 Operating income (loss) -$400 $13,500 SI7.500) $16,400) *These traceable expenses could be eliminated if the product lines to which they are traced were discontinued. Required: Recommend which segments, if any, should be eliminated. Prepare a report in good form to support your answer. Show all the necessary calculations.

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter23: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 23.3TIF

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The management of Your Corporation is considering dropping a product. Data from the company's accounting system appear below: Sales $40,000 VC $15,000 Fixed manufacturing costs $19,000 Fixed selling and administrative costs $11,000 Investigation has revealed that $11,700 of the fixed manufacturing expenses and $6,300 of the fixed selling and administrative expenses will go away if the product is discontinued. What would be the effect on the company's overall net operating income if this product is dropped? Group of answer choices decrease by $7,000 increase by $7,000 increase by $13,000 decreased by $25,000 decreased by $13,000
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14. A company operates with two departments: Department AA and Department BB. The manager is considering to drop Department BB because of the income statement prepared by the bookkeeper shown below: Dept. AA Dept. BB Sales P3,000,000 P1,000,000 Less: Variable costs 900,000 400,000 Contribution Margin 2,100,000 600,000 Less: Total Fixed costs 1,400,000 800,000 Operating Profit/(loss) P 700,000 (P200,000) Of the total fixed costs, P350,000 allocated to Det. BB is considered ass sunk cost. In, addition if Dept. BB will be eliminated 10% decrease of sales in Dept. AA will occur. a. What is the segment margin of Department BB? b. If Dept. BB will be dropped, what will be the amount of operating income of the company?
14. A company operates with two departments: Department AA and Department BB. The manager is considering to drop Department BB because of the income statement prepared by the bookkeeper shown below: Dept. AA Dept. BB Sales P3,000,000 P1,000,000 Less: Variable costs 900,000 400,000 Contribution Margin 2,100,000 600,000 Less: Total Fixed costs 1,400,000 800,000 Operating Profit/(loss) P 700,000 (P200,000) Of the total fixed costs, P350,000 allocated to Det. BB is considered ass sunk cost. In, addition if Dept. BB will be eliminated 10% decrease of sales in Dept. AA will occur.
Question 2Swann Systems is forecasting the following income statement for the upcoming year:Sales $5,000,000Operating costs (excluding depreciation) $3,000,000Gross margin $2,000,000Depreciation $500,000EBIT $1,500,000Interest $500,000EBT $1,000,000Taxes (40%) 400,000Net income $ 600,000The company’s president is disappointed with the forecast and would like to see Swann generate higher sales and a forecasted net income of $2,000,000. Assume that operating costs (excluding depreciation) are always 60 percent of sales. Also, assume that depreciation, interest expense, and the company’s tax rate, which is 40 percent, will remain the same even if sales change. What level of sales would Swann have to obtain to generate $2,000,000 in net income?Show your calculations. Question 3 Please review the two PPT packages below, and then prepare an essay (or memo) that includes the following elements. Limit to 2-4 pages (including charts / tables / references where applicable).What is the key theme…