Homework Help is Here – Start Your Trial Now!
Business
Accounting
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 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

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 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

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 9P: Grand Canyon Manufacturing Inc. produces and sells a product with a price of 100 per unit. The...
See similar textbooks
icon
Related questions
Question
Please show the solution on how to get the answer.
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 ? --m b. If Dept. BB will be dropped, what will be the amount of operating income of the company
Transcribed Image Text: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 ? --m b. If Dept. BB will be dropped, what will be the amount of operating income of the company
Expert Solution
steps

Step by step

Solved in 2 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Market Efficiency
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS