Please help me Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis (LO6-4, LO6-5)[The following information applies to the questions displayed below.]Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm hastwo offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variablecosts. A contribution format segmented income statement for the company's most recent year is given:officeTotal Company$ 862,500465,750396,750193,200Chicago$ 172,50051,750120,75089,700$ 31,050Minneapolis$ 690,000414,000276,000103,500$ 172,500Sales100.08100Variable expensesContribution marginTraceable fixed expenses10060840%54.0N3046.087022.4852115%office segment narginCommon fixed expenses not traceable to officesNet operating income203,55023.618251138,000$ 65,55016.07.68Exercise 6-16 Part 33. Assume that sales in Chicago increase by $57,500 next year and that sales in Minneapolis remain unchanged. Assume no change infixed costs.a. Prepare a new segmented income statement for the company (Round your percentage answers to 1 decimal place (i.e. 0.1234should be entered as 12.3).) a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e. 0.1234should be entered as 12.3).)SegmentsTotal CompanyChicagoMinneapolisAmountAmountAmountSales920,000100.0 $230,000100.0 $ 690,000100.0Variable expenses414,00060.0230,00089,700Contribution margin920,000100.0100.0276,00040.0Traceable fixed expenses193,200103,50015.0Office segment margin726,800100.0 $ 140,300100.0 $172,50025.0Common fixed expenses not traceable to segments138,000Net operating income588,800100.0

Segments Total Company Chicago Minneapolis Amount % Amount % Amount % Sales $…

Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis (LO6-4, LO6-5) [The following information applies to the questions displayed below] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: office Total Company $ 862,500 100.08 54.0 Chicago $ 172,500 51,750 120,750 89,700 $ 31,050 Minneapolis $ 690,000 414,000 276,000 103, 500 $ 172,500 Sales 100 30 100 Variable expenses Contribution margin Traceable fixed expenses 465,750 60 46.08 396,750 193,200 708 40 22.4 521 154 office segnent nargin Comon fixed expenses not traceable to offices 203, 550 23.6 18 258 138,000 $65,550 16.00 Net operating income 7.61 Exercise 6-16 Part 3 . Assume that sales in Chicago increase by $57,500 next year and that sales in Minneapolis remain unchanged. Assume no change in xed costs. a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (l.e. 0.1234 should be entered as 12.3).)

Exercise 6-16 Working with a Segmented Income Statement; Break-Even Analysis (LO6-4, LO6-5) [The following information applies to the questions displayed below] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: office Total Company $ 862,500 100.08 54.0 Chicago $ 172,500 51,750 120,750 89,700 $ 31,050 Minneapolis $ 690,000 414,000 276,000 103, 500 $ 172,500 Sales 100 30 100 Variable expenses Contribution margin Traceable fixed expenses 465,750 60 46.08 396,750 193,200 708 40 22.4 521 154 office segnent nargin Comon fixed expenses not traceable to offices 203, 550 23.6 18 258 138,000 $65,550 16.00 Net operating income 7.61 Exercise 6-16 Part 3 . Assume that sales in Chicago increase by $57,500 next year and that sales in Minneapolis remain unchanged. Assume no change in xed costs. a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (l.e. 0.1234 should be entered as 12.3).)

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

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

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

Chapter20: Variable Costing For Management Analysis

Section: Chapter Questions

Problem 20.22EX: Variable costing income statement and contribution margin analysis for a service company The actual...

See similar textbooks

Similar questions

Product costing and decision analysis for a service company Pleasant Slay Medical Inc. wishes to determine its product costs. Pleasant Stay offers a variety of medical procedures (operations) that are considered its products. The overhead has been separated into three major activities. The annual estimated activity costs and activity bases follow: Activity Budgeted Activity Cost Activity Base Scheduling and admitting 432,000 Number of patients Housekeeping 4,212,000 Number of patient days Nursing 5,376,000 Weighted care unit Total costs 10,020,000 Total patient days are determined by multiplying the number of patients by the average length of stay in the hospital. A weighted care unit (wcu) is a measure of nursing effort used to care for patients. There were 192,000 weighted care units estimated for the year. In addition, Pleasant Stay estimated 6,000 patients and 27,000 patient days for the year. (The average patient is expected to have a a little more than a four-day stay in the hospital.) During a portion of the year, Pleasant Stay collected patient information for three selected procedures, as follows: Activity-Base Usage Procedure A Number of patients 280 Average length of stay 6 days Patient days 1,680 Weighted care units 1,200 Procedure B Number of patients 650 Average length of stay 5 days Patient days 3,250 Weighted care units 6,000 Procedure C Number of patients 1,200 Average length of stay 4 days Patient days 4,800 Weighted care units 24,000 Private insurance reimburses the hospital for these activities at a fixed daily rate of 406 per patient day for all three procedures. Instructions 1. Determine the activity rates. 2. Determine the activity cost for each procedure. 3. Determine the excess or deficiency of reimbursements to activity cost. 4. Interpret your results.
Required information SB Exercise 6-16 through Exercise 6-17 (Algo) Skip to question [The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company’s most recent year is given: Office Total Company Chicago Minneapolis Sales $ 504,000 100 % $ 177,000 100 % $ 327,000 1 % Variable expenses 261,000 50 % 63,000 30 % 196,200 60 % Contribution margin 243,000 50 % 114,000 70 % 130,800 40 % Traceable fixed expenses 133,200 28 % 81,600 52 % 52,320 16 % Office segment margin 109,800 22 % $ 32,400 18 % $ 78,480 24 % Common fixed expenses not traceable to offices 72,000…
Exercise 9-47 (Static) Activity-Based versus Traditional Costing-Ethical Issues (LO 9-3, 4, 5) Wendy Chen established Windy City Coaching (WCC) to provide teen counseling and executive coaching services to its clients. WCC charges a $300 fee per hour for each service. The revenues and costs for the year are shown in the following income statement. WINDY CITY COACHING Income Statement TeenCounseling ExecutiveCoaching Total Revenue $ 66,000 $ 135,000 $ 201,000 Expenses: Administrative support 40,000 Transportation, etc 36,000 Equipment 20,000 Profit $ 105,000 WCC has kept good records of the following data for cost allocation purposes. Activity Level Activity Cost Driver TeenCounseling ExecutiveCoaching Providing administrative support Number of clients 6 4 Traveling Number of visits 100 150 Using equipment Computer hours 900 700 Required: a.…
Exercise 6-2 First Stage Allocation [LO6-2] SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system: Driver and guard wages $ 860,000 Vehicle operating expense 290,000 Vehicle depreciation 170,000 Customer representative salaries and expenses 200,000 Office expenses 60,000 Administrative expenses 360,000 Total cost $ 1,940,000 The distribution of resource consumption across the…
Exercise 7-2 (Algo) First Stage Allocation [LO7-2] SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system: Driver and guard wages $ 960,000 Vehicle operating expense 390,000 Vehicle depreciation 270,000 Customer representative salaries and expenses 300,000 Office expenses 160,000 Administrative expenses 460,000 Total cost $ 2,540,000 The distribution of resource consumption across the activity cost…
Problem 11-65 (Static) Reciprocal Cost Allocation - Outsourcing a Service Department (LO 11-4, 5) BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting Domestic International Employees 25 45 180 Transactions 25,000 20,000 80,000 Department direct costs $360,000 144,000 936,000 $3,600,000 BluStar estimates that the cost structure in its operations is as follows. Administration Accounting Domestic International Variable costs $150,000 36,000 678,000 $2,562,000 Fixed costs 210,000 108,000 258,000 1,038,000 Total costs $360,000 144,000 936,000 $3,600,000 Avoidable fixed…
Exercise 6-3 Compute Activity Rates [LO6-3] Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of customer garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below: Activity Cost Pool Activity Measure Caring for lawn Square feet of lawn Caring for garden beds–low maintenance Square feet of low maintenance beds Caring for garden beds–high maintenance Square feet of high maintenance beds Travel to jobs Miles Customer billing and service Number of customers The company has already…
Required information Exercise 9-35 and 9-36 (Algo) Skip to question The Personnel Department at Hernandez Bros. is centralized and provides services to the two operating units: Miami and New York. The Miami unit is the original unit of the company and is well established. The New York unit is new, much like a start-up company. The costs of the Personnel Department are allocated to each unit based on the number of employees in order to determine unit profitability. The current rate is $620 per employee. Data for the fiscal year just ended show the following. Miami New York Number of employees 1,320 420 Number of new hires 12 32 Number of employees departing 18 18 Exercise 9-35 (Algo) Unitwide versus Department Allocation-Administrative (Service) Function (LO 9-2, 3) Required: a. Compute the cost allocated to each unit using the current allocation system. b. Livan, the manager of the Miami unit, is unhappy with the allocation from Personnel. He…
Exercise 11-36 (Algo) Cost Allocation: Step Method (LO 11-3) Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The following usage data for each of the service departments for the previous period follow. Repairs HR IT M1 M2 Repairs — 0 % 0 % 40 % 60 % HR 10 % — 20 % 35 % 35 % IT 0 % 10 % — 20 % 70 % The direct costs of the service departments in the previous period were $92,000 for Repairs, $111,600 for HR, and $207,000 for IT. Required: Use the step method to allocate the service department costs to the production departments. Allocate HR costs first, followed by IT, and then Repairs. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
Exercise 6-4 (Algo) Basic Segmented Income Statement [LO6-4] Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Last year the company produced and sold 35,500 units of Weedban and 24,000 units of Greengrow. Its annual common fixed expenses are $109,000. Required: Prepare a contribution format income statement segmented by product lines.
Exercise 9-31 (Algo) Reported Costs and Decisions (LO 9-1) McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 15 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $880,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Chairs Desks Sales revenue $ 1,001,000 $ 2,469,600 Direct materials 598,000 940,000 Direct labor 120,000 430,000 Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $790,000. The…
Exercise 7-4 (Algo) Second-Stage Allocation [LO7-4] Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor $ 11 per direct labor-hour Machine processing $ 3 per machine-hour Machine setups $ 40 per setup Production orders $ 160 per order Shipments $ 125 per shipment Product sustaining $ 900 per product Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year 200 2,000 Direct labor-hours 1,150 50 Machine-hours 2,400 40 Machine setups 11 3 Production orders 11 3 Shipments 22 3 Product sustaining 3 3 Required: How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?