A company is a wholesale distributor of electronic equipment who has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales P 1,000,000 Variable expenses 390,000 Contribution Margin 610,000 Fixed Expenses 625,000 Net operating Income (loss) P(15,000) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Division East Central West Sales P250,000 P400,000 P350,000 Variable expenses as a percentage of sales 52% 30% 40% Traceable Fixed Expenses P160,000 P200,000 P175,000 Required: a. Prepare a contribution format income statement segmented by the division. East Central West b. The marketing department has proposed increasing the West Division’s monthly advertising by P15,000 believing that it would increase the division’s sales by 20%. Assuming these estimates are accurate, how much would the company’s net operating income increase/(decrease) if the proposal is implemented
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
A company is a wholesale distributor of electronic equipment who has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement:
Sales P 1,000,000
Variable expenses 390,000
Contribution Margin 610,000
Fixed Expenses 625,000
Net operating Income (loss) P(15,000)
In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information:
Division
East Central West
Sales P250,000 P400,000 P350,000
Variable expenses as a percentage of sales 52% 30% 40%
Traceable Fixed Expenses P160,000 P200,000 P175,000
Required:
a. Prepare a contribution format income statement segmented by the division.
East Central West
b. The marketing department has proposed increasing the West Division’s monthly advertising by P15,000 believing that it would increase the division’s sales by 20%. Assuming these estimates are accurate, how much would the company’s net operating income increase/(decrease) if the proposal is implemented?
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