Sales .... $1,000,000 . Variable expenses. . 390,000 Contribution margin 610,000 Fixed expenses... 625,000 Net operating income (loss). . . . $ (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 ...... $250,000 $400,000 $350,000 Variable expenses as a percentage of sales Traceable fixed expenses 52% 30% 40% $160,000 $200,000 $175,000 Required: 1. Prepare a contribution format income statement segmented by divisions. The Marketing Department has proposed increasing the West Division's monthly advertising by $15,000 based on the belief that it would increase that 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?

Sales .... $1,000,000 . Variable expenses. . 390,000 Contribution margin 610,000 Fixed expenses... 625,000 Net operating income (loss). . . . $ (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 ...... $250,000 $400,000 $350,000 Variable expenses as a percentage of sales Traceable fixed expenses 52% 30% 40% $160,000 $200,000 $175,000 Required: 1. Prepare a contribution format income statement segmented by divisions. The Marketing Department has proposed increasing the West Division's monthly advertising by $15,000 based on the belief that it would increase that 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?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...

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