Sales Variable expenses Contribution margin $ 1,555,000 601,000 954,000 1,049,000 Fixed expenses Net operating income (loss) $ (95,000) 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: East Division Central $ 620,000 39% Sales $ 355,000 West $ 580,000 35% Variable expenses as a percentage of sales Traceable fixed expenses $ 265,000 $ 337,000 $ 200,000 Required: 1. Prepare a contribution format Income statement segmented by divisions. 2-a. The Marketing Department has proposed Increasing the West Division's monthly advertising by $29,000 based on the belief that would increase that division's sales by 13%. Assuming these estimates are accurate, how much would the company's net operating Income Increase (decrease) if the proposal is Implemented? 2-b. Would you recommend the Increased advertising? 44%

Sales Variable expenses Contribution margin $ 1,555,000 601,000 954,000 1,049,000 Fixed expenses Net operating income (loss) $ (95,000) 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: East Division Central $ 620,000 39% Sales $ 355,000 West $ 580,000 35% Variable expenses as a percentage of sales Traceable fixed expenses $ 265,000 $ 337,000 $ 200,000 Required: 1. Prepare a contribution format Income statement segmented by divisions. 2-a. The Marketing Department has proposed Increasing the West Division's monthly advertising by $29,000 based on the belief that would increase that division's sales by 13%. Assuming these estimates are accurate, how much would the company's net operating Income Increase (decrease) if the proposal is Implemented? 2-b. Would you recommend the Increased advertising? 44%

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter24: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 3TIF: Communication The Norse Division of Gridiron Concepts Inc. experienced significant revenue and...

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Effect of proposals on divisional performance A condensed income statement for the Jet Ski Division of Amazing Rides Inc. for the year ended December 31. 20Y2, is as follows Assume that the Jet Ski Division received no charges from service departments. The president of Amazing Rides has indicated that the division's rate of return on a $15,000,000 investment must be increased to at least 12% by the end of the next year if operations are to continue. The division manager is considering the following three proposals Proposal 1: Transfer equipment with a book value of J3.000.000 to other divisions at no gain or loss and lease similar equipment. The annual lease payments would exceed the amount of depreciation expense on the old equipment by $264,000. This increase in expense would be included as part of the cost of goods sold. Sales would remain unchanged. Proposal 2: Purchase new and more efficient machining equipment and thereby reduce the cost of goods sold by $480,000. Sales would remain unchanged, and the old equipment, which has no remaining book value, would be scrapped at no gain or loss. The new equipment would increase invested assets by an additional $1,000,000 for the year. Proposal 5? Reduce invested assets by discontinuing the tandem jet ski line. This action would eliminate sales of $2,280,000, cost of goods sold of $1,400,000, and operating expenses of $463,600. Assets of $4,200,000 would be transferred to other divisions at no gain or loss. Instructions Which of the three proposals would meet the required 12% return on investment?'
Communication The Norse Division of Gridiron Concepts Inc. experienced significant revenue and profit growth from 20Y4 to 20Y6 as shown in the following divisional income statements: There are no support department allocations, and the division operates as an investment center that must maintain a 15% return on invested assets. Determine the profit margin, investment turnover, and return on investment for the Norse Division for 20Y420Y6. Based on your computations, write a brief memo to the president of Gridiron Concepts Inc., Knute Holz, evaluating the divisions performance.
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Hello, I only need Req B. Dudley Transport Company divides its operations into four divisions. A recent income statement for its West Division follows. DUDLEY TRANSPORT COMPANY West Division Income Statement for Year 3 Revenue $ 300,000 Salaries for drivers (210,000 ) Fuel expenses (30,000 ) Insurance (42,000 ) Division-level facility-sustaining costs (24,000 ) Companywide facility-sustaining costs (78,000 ) Net loss $ (84,000 ) Required By how much would companywide income increase or decrease if West Division is eliminated? Should West Division be eliminated? Assume that West Division is able to increase its revenue to $324,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segment were eliminated. Should West Division be eliminated if revenue were $324,000? What is the minimum amount of revenue required to justify continuing the operation of West Division?
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Supply the missing data in the following table : Division A Division B Division C Sales P 60,000 P 75,000 P 100,000 Operating Income _______ 25,000 _______ Operating Assets 30,000 _______ P 50,000 Return on investment 15 % 10 % 20 % Minimum required rate of return 10 % _______ _______ Residual income ________ P 5,000 0 Show the solutions pls, thank you.
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