Prepare an Incremental analysis to assist Management in making a decision.
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The following information has been extracted from the books of the ABC company which has two operating divisions.
|
Battery Division |
Tyre Division |
|
|
|
Sales Revenue |
1,664,200 |
96,200 |
Cost of Goods sold |
978,520 |
76,470 |
|
---------------- |
---------------- |
Contribution Margin |
685,980 |
19,730 |
Operating Expenses |
527,940 |
43,600 |
|
-------------- |
------------- |
Net Income / (Deficit) |
157,740 |
(23,870) |
|
--------------- |
--------------- |
|
|
|
It has been determined that in the Tyre Division, the cost of Goods Sold is made up of $ 70,000 in variable costs and $ 6,470 in Fixed costs.
The Operating Cost is made up of $ 15,000 of Variable Costs and $ 28,600 of Fixed costs.
The company’s accountant has recommended that the Tyre division be closed as it is making a loss.
None of the Fixed costs will be saved if the Tyre Division is closed.
- Prepare an Incremental analysis to assist Management in making a decision.
- Should the company follow the accountant’s recommendation.
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- The following information has been extracted from the books of the ABC company which has two operating divisions. Battery Division Tyre Division Sales Revenue 1,664,200 96,200 Cost of Goods sold 978,520 76,470 ---------------- ---------------- Contribution Margin 685,980 19,730 Operating Expenses 527,940 43,600 -------------- ------------- Net Income / (Deficit) 157,740 (23,870) --------------- --------------- Additionally. it has been determined that in the Tyre Division, the cost of Goods Sold is made up of $ 70,000 in variable costs and $ 6,470 in Fixed costs. Similarly, the Operating Cost is made up of $ 15,000 of Variable Costs and $ 28,600 of Fixed costs. The company’s accountant has recommended that the Tyre division be closed as it is making a loss. None of the Fixed costs will be saved if the Tyre…The following information has been extracted from the books of the ABC company which has two operating divisions. Battery Division Tyre Division Sales Revenue 1,664,200 96,200 Cost of Goods sold 978,520 76,470 ---------------- ---------------- Contribution Margin 685,980 19,730 Operating Expenses 527,940 43,600 -------------- ------------- Net Income / (Deficit) 157,740 (23,870) --------------- --------------- Additionally. it has been determined that in the Tyre Division, the cost of Goods Sold is made up of $ 70,000 in variable costs and $ 6,470 in Fixed costs. Similarly, the Operating Cost is made up of $ 15,000 of Variable Costs and $ 28,600 of Fixed costs. The company’s accountant has recommended that the Tyre division be closed as it is making a loss. None of the Fixed costs will be saved if the Tyre Division is closed. Required: Prepare an Incremental analysis to…The following information has been extracted from the books of the ABC company which has two operating divisions. Battery Division Tyre Division Sales Revenue 1,664,200 96,200 Cost of Goods sold 978,520 76,470 ---------------- ---------------- Contribution Margin 685,980 19,730 Operating Expenses 527,940 43,600 -------------- ------------- Net Income / (Deficit) 157,740 (23,870) --------------- --------------- Additionally. it has been determined that in the Tyre Division, the cost of Goods Sold is made up of $ 70,000 in variable costs and $ 6,470 in Fixed costs. Similarly, the Operating Cost is made up of $ 15,000 of Variable Costs and $ 28,600 of Fixed costs. The company’s accountant has recommended that the Tyre division be closed as it is making a loss. None of the Fixed costs will be saved if the Tyre…
- From these results of operations, determine the cost of goods manufactured of XY Co.Finished goods -beg P72,000 Sales P465,000Finished goods - end P66,000 Gross margin P88,000 a. P371,000b. P377,000c. P383,000d. P459,000GREEN COMPANY has two divisions: Del Sur Division and Del Norte Division. The following data are for the most recent operating period: Total Company Del Sur Division Del Norte DivisionSales P 418,000 P 193,000 P 225,000 Variable expenses P 130,880 P 79,130 P 51,750 Traceable fixed expenses P 186,000 P 77,000 P 109,000 Common fixed expense P 79,420 P 36,670 P 42,750 The bookkeeper allocated common fixed expenses to the divisions on the basis of sales. Required: a. What is the company's overall break-even sales? b. Determine the break-even point for Del Sur Division c. Determine the break-even point for Del Norte Division.The following information relates to Wal-Mart Corporation for the past accounting period Cost Direct Center Cost Proportion of Services used by: S1 S2 S3 P1 P2 P3 S1 P120,000 .10 .30 .25 .20 .15 S2 80,000 .20 .40 .20 .20 S3 45,000 .60 .35 .05 P1 78,000 P2 99,000 P3 45,000 __________28. Using the algebraic method, how much is the total costs to be allocated by S1 to all departments? __________29. Using algebraic method, how much is the cost to be allocated by S3 to S2? __________30. What is the total cost to be allocated by the servicing departments to producing departments?
- The following information pertains to the Liberty Company and its divisions for the year ended December 31, 2014 : Sales to unaffiliated customers P10,000,000Inter- segment sales of products similar to those sold to unaffiliated customers 2,000,000Liberty Company all its divisions are engaged solely in manufacturing operations. Liberty has a reportable segment if the segment's revenue will total to what amount?Wayne, Inc. has four operating segments with the following information: Tables Bookcases Cabinets Chairs Sales to outsiders $ 2,600,000 $ 3,200,000 $ 5,350,000 $ 1,780,000 Intersegment transfer $ 380,000 $ 0 $ 125,000 $ 117,000 Segment expenses $ 1,900,000 $ 2,200,000 $ 4,480,000 $ 2,174,000 Segment assets $ 10,800,000 $ 12,000,000 $ 18,000,000 $ 3,500,000 Which operating segments are separately reportable under the revenue test?Bible Corporation has two divisions: the OT Products Division and the NT Products Division. The OT Products Division's divisional segment margin is P255,000 and the NT Products Division's divisional segment margin is P59,800. The total amount of common fixed expenses not traceable to the individual divisions is P163,700. What is the company's net operating income? (P314,800) P151,100 P379,200 P455,000
- A financial analyst for Simon Manufacturing prepared the following report: Customers Customer-Level Operating Income Customer Revenue A $5041.00 $26,250 B $4202.00 $30,000 C $3368.00 $15,000 D $1069.50 $7,300 E $984.80 $5,100 F $844.80 $4,400 G $336.60 $1,800 H $252.00 $4,500 I ($168.00) $2,400 J ($676.00) $2,600 What is the cumulative customer-level operating income as a percentage of customer level operating income for the top 4 most profitable (operating income) customers? 1) 17.4% 2) 89.7% 3) 85.0% 4) 79.1%The following information relates to Wal-Mart Corporation for the past accounting period Cost Direct Center Cost Proportion of Services used by: S1 S2 S3 P1 P2 P3 S1 P120,000 .10 .30 .25 .20 .15 S2 80,000 .20 .40 .20 .20 S3 45,000 .60 .35 .05 P1 78,000 P2 99,000 P3 45,000 __________29. Using algebraic method, how much is the cost to be allocated by S3 to S2? __________30. What is the total cost to be allocated by the servicing departments to producing departments?Vernon transport company divides its operations into four divisions. A recent statement for its West Division folows Vernon Transport Comapny Wesy division Income Statement for year 3 Revenue $670,000 Salaries for drivers (520,000) Fuel expenses (67,000) Insurance (87,000) Division-level facility- sustaining costs (57,000) Companywide facility-sustaining costs (147,000) Net loss $208,000 Required a) By how much would cormpanywide income increase or decrease if West Division is estimated? Should West Division be eliminated? b) assume that West Division is able to increase its revenue to $760,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segemnt were eliminated. Should West Division be eliminated if revenue were $760,000? c) What is the mininum amount of revenue required to Jusify continuing the operation of West Divison? Complete this question by entering your answer in the table below. Income Would…