Segmented Income Statement for MSI's ToddleTown Tours Product Lines Post Pet Store Grocery Getaway $50,000 21,000 $29,000 3,400 $25,600 12,800 $12,800 Office Polka Parade Total $55,000 25,000 $30,000 5,000 $25,000 14,080 $10,920 $20,000 $125,000 61,000 Sales revenue 15,000 $ 5,000 64,000 12,400 Variable costs Contribution margin 4,000 $1,000 $ 51,600 5,120 Less: Direct Fixed costs Segment margin 32,000 $(4,120) 19,600 Less: Common fixed costs* Net operating income (loss) *Allocated based on total sales dollars. MSI has determined that elimination of the Post Office Polka (POP) program would not impact sales of the other two items. The remaining fixed overhead currently allocated to the POP product wou to the remaining two products. Required: 1. Calculate the incremental effect on profit if the POP product is eliminated. Decrease Effect on Profit 2. Should MSI drop the POP product? Yes No 3-a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $4,000 of the common fixed costs could be avoided if the POP product line were eliminated. Increase Effect on Profit

Question

How would i find the effect on the profit?

Segmented Income Statement for MSI's
ToddleTown Tours Product Lines
Post
Pet Store
Grocery
Getaway
$50,000
21,000
$29,000
3,400
$25,600
12,800
$12,800
Office
Polka
Parade
Total
$55,000
25,000
$30,000
5,000
$25,000
14,080
$10,920
$20,000 $125,000
61,000
Sales revenue
15,000
$ 5,000 64,000
12,400
Variable costs
Contribution margin
4,000
$1,000 $ 51,600
5,120
Less: Direct Fixed costs
Segment margin
32,000
$(4,120) 19,600
Less: Common fixed costs*
Net operating income (loss)
*Allocated based on total sales dollars.
MSI has determined that elimination of the Post Office Polka (POP) program would not impact sales of the other two items. The remaining fixed overhead currently allocated to the POP product wou
to the remaining two products.
Required:
1. Calculate the incremental effect on profit if the POP product is eliminated.
Decrease
Effect on Profit
2. Should MSI drop the POP product?
Yes
No
3-a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $4,000 of the common fixed costs could be avoided if the POP product line were eliminated.
Increase
Effect on Profit
Expand
Transcribed Image Text

Segmented Income Statement for MSI's ToddleTown Tours Product Lines Post Pet Store Grocery Getaway $50,000 21,000 $29,000 3,400 $25,600 12,800 $12,800 Office Polka Parade Total $55,000 25,000 $30,000 5,000 $25,000 14,080 $10,920 $20,000 $125,000 61,000 Sales revenue 15,000 $ 5,000 64,000 12,400 Variable costs Contribution margin 4,000 $1,000 $ 51,600 5,120 Less: Direct Fixed costs Segment margin 32,000 $(4,120) 19,600 Less: Common fixed costs* Net operating income (loss) *Allocated based on total sales dollars. MSI has determined that elimination of the Post Office Polka (POP) program would not impact sales of the other two items. The remaining fixed overhead currently allocated to the POP product wou to the remaining two products. Required: 1. Calculate the incremental effect on profit if the POP product is eliminated. Decrease Effect on Profit 2. Should MSI drop the POP product? Yes No 3-a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $4,000 of the common fixed costs could be avoided if the POP product line were eliminated. Increase Effect on Profit

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: During the current year, merchandise is sold for $98,300 cash and $644,900 on account. The cost of m...

A: Calculate the amount of net sales.

Q: BE 20-1 High-Low Method 1The manufacturing costs of Rosenthal Industries for the first three months...

A: High low method is used in accounting to separate the variable cost & fixed cost from limited da...

Q: Question 2 Prepare adjusting journal entries for Blue Gardening in the GENERAL JOURNAL for the year ...

A: Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to...

Q: Suzy's Cool Treatz is a snow cone stand near the local park. To plan for the future, the owner wants...

A: High-low method is a cost computation technique which separates variable and fixed cost from total c...

Q: Question 1

A: InventoryInventory refers to the Work-in-progress, raw material or the finished goods that are assum...

Q: I need assistance on the following regarding the attached balance sheet and income statement: Requir...

A: Click to see the answer

Q: Required Information [The following Information applies to the questions displayed below.] Chavez Co...

A: Bank reconciliation:Bank statement is prepared by bank, while companies maintains its own records fr...

Q: Current Position Analysis The following data were taken from the balance sheet of Nilo Company at th...

A: Working capital indicate the short term liquid funds available after meeting all the current liabili...

Q: Compute conversion costs given the following data: Direct Materials, $364,700; Direct Labor, $194,00...

A: Conversion Cost: The cost that includes direct labor and factory overheads is reported as conversion...

Q: conduct horizontal and vertical analyses for the balance sheet and income statement accounts and rep...

A: 1) Prepare the horizontal analysis to analyze the changes in Starbucks’ fixed assets, intangible ass...

Q: Todd Corporation wrote off $100,000 of obsolete inventory at December 31, 2017.  Required: What effe...

A: Obsolete inventory refers to the damaged inventory. It cannot be used for further processing of good...

Q: Snowy River Stallion Inc. produces horse and rancher equipment. Costs from Support Department 1 are ...

A: Cost allocation is a method of assigning cost of one department to other departments. It helps to ma...

Q: Department A had 4,100 units in work in process that were 72% completed as to labor and overhead at ...

A: Answer for the first question: 

Q: Homework question 6, chapter 9

A: Calculate premium on bonds payable:Premium on bonds payable = Carrying value of bonds - Face value o...

Q: Applying the Cost of Goods Sold Model Wilson Company sells a single product. At the beginning of the...

A: Compute cost of goods sold and ending inventory using cost of goods sold model as shown below: First...

Q: Your answer is incorrect.  Try again.     Your accounts receivable clerk, Mitra Adams, to whom ...

A: Accounts receivable:  Accounts receivable is an asset of the firm, which refers to the amount which ...

Q: The general ledger of the Jumper Incorporated is showing an Accounts Receivable balance of $80,000, ...

A: Direct Write-off Method: Direct write-off method is used to recognize bad debt expenses that can ari...

Q: Total fixed costs for Randolph Manufacturing are $784,000. Total costs, including both fixed and var...

A: Fixed cost:It is the cost that would not change with an increase or decrease in the number of goods ...

Q: Dexter Company uses the direct write-off method March 11 Dexter determines that it cannot collect $4...

A: Record journal entry for under direct write-off method for accounts receivable as shown below:Under ...

Q: Required information   [The following information applies to the questions displayed below.]George a...

A: Click to see the answer

Q: Prepare a statement of cash flows for 2012 for Garcia Corporation Presented below is a condensed ...

A: Prepare statement of cash flows:

Q: how would i find the contribution margins for the two pots

A: Click to see the answer

Q: Current Attempt in Progress Sunland Company sells a product with a contribution margin of $16 per un...

A: Break-Even Point: It is the point of sales at which entity neither earns a profit nor suffers a loss...

Q: Class Specifi + CLA Annotated B WOMEN EM WileyPLLX THE LIVED E http://edugen.wileyplus.com/edugen/st...

A: Prepare journal entries.

Q: conduct horizontal and vertical analyses for the balance sheet and income statement accounts and rep...

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question s...

Q: If Oakridge Home Improvement Company issues 6,000 shares of $5 par value common stock for $210,000, ...

A: Par value represents the value per share stated in the corporate charter at the time of incorporatio...

Q: Your company manufactures bikes that sell for $10,000. Unit variable costs are $6,000 and totalmonth...

A: Compute breakeven units for the company as shown below:

Q: Will Company began operations late in 2019 and adopted the conventional retail inventory method. Bec...

A: (a) Conventional retail method.First, calculate estimated inventory at retail.

Q: Closing Entries On July 31, 2019, the balances of the accounts appearing in the ledger of Serbian In...

A: Closing entries are the entries which are made with the purpose of closure of a particular account. ...

Q: Question 3 How to fill in this table part a and b with steps

A: Income Statement: An income statement is one of the financial statements that display the financial ...

Q: #5

A: As per authoring guidelines the first question is answered. Please repost the question specifying qu...

Q: rt Ctrl 35. Compute the missing financial amounts (a) and (b): Stockholders' Equity $31,500 Assets L...

A: Accounting equation represents the relationship between the assets, liabilities, and owner’s equity ...

Q: US Gant Accounting performs two types of services, Audit and Tax. Gant's overhead costs consist of c...

A: Traditional costing system allocated indirect cost either on the basis of direct labor hours or numb...

Q: Please give me instruction on the following step by step:   Variable Costing Income Statement The fo...

A: The variable Income statement is prepared to derive the contribution margin which is obtained by sub...

Q: 48. Use Oma Bean Corporation's adjusted trial balance to prepare Oma Bean's balance sheet for the cu...

A: Step 1:Calculate the value of net income:  

Q: If Jackson Furniture Company issues 5,000 shares of $5 par value common stock for $210,000 current q...

A: When common stock is issued to the general public at an issue price more than par value, the account...

Q: Exercise 7-03 Listed below are five procedures followed by Eikenberry Company.Indicate whether eac...

A:  Accounting principle: These are the guidelines which are to be applied while preparing the accounti...

Q: Windsor, Inc. took a physical inventory on December 31 and determined that goods costing $222,500 we...

A: Prepare Windsor’s ending inventory.

Q: Current Attempt in Progress Concord rents DVDS that are mailed out to customers upon demand. Concord...

A: Activity based cost system (ABC) is a cost accounting system that uses both unit and non-unit based ...

Q: Monty Company has recorded the following items in its financial records. $50,200 Cash in bank Cash i...

A: Calculate the amount that Monty should report as Cash and Cash equivalent on its balance sheet.

Q: Madison Inc. reported sales of $1,000,000, a debit balance in Accounts Receivable of $80,000, and a ...

A: Prepare journal entry.

Q: View Policies Current Attempt in Progress pport Werth Company produces tie racks. Its estimated fixe...

A: Breakeven point is the situation where the company earns revenue at which a business has no profit o...

Q: Q10

A: 1.Prepare amortization schedule: 

Q: Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y3 as at the beginni...

A: Following is the Cost-Volume Profit Chart:

Q: View Policies Current Attempt in Progress Foxx Company incurs $440000 overhead costs each year in it...

A: Click to see the answer

Q: Periodic inventory by three methods; cost of goods sold The units of an item available for sale duri...

A: Inventory valuation can be done under different methods like FIFO,LIFO, Weighted Average.FIFO Stands...

Q: How do you compute the unit varible cost for an item in manufacturing?

A: Variable costs: Variable costs are costs that vary in direct proportion with changes in production v...

Q: Earnings per Share, Price-Earnings Ratio, Dividend Yield The following information was taken from th...

A: a.Compute earnings per share on the common stock.

Q: Explain the meaning of customer value. How is focusing on customer value changing managerial account...

A: Customer value: The customers play a wider role in the business. The major business transactions rev...

Q: Accounting Question

A: Calculation of break-even point: