When using a segmented income statement, what is the best number to look at to determine the effect of the elimination of a segment on the netoperating income of the company as a whole?OMultiple Choicethe product line's sales dollarsthe product line's contribution marginthe product line's segment marginthe product line's segment margin minus an allocated portion of common fixed expenses

An income statement is prepared by the business organizations so as to know how much amount of…

When using a segmented income statement, what is the best number to look at to determine the effect of the elimination of a segment on the net operating income of the company as a whole? Multiple Choice the product line's sales dollars the product line's contribution margin the product line's segment margin the product line's segment margin minus an allocated portion of common fixed expenses

When using a segmented income statement, what is the best number to look at to determine the effect of the elimination of a segment on the net operating income of the company as a whole? Multiple Choice the product line's sales dollars the product line's contribution margin the product line's segment margin the product line's segment margin minus an allocated portion of common fixed expenses

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 6PA: Using the information from BDS Enterprises, prepare the income statement to include all costs, but...

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The contribution margin is the a. amount by which sales exceed total fixed cost. b. difference between sales and total cost. c. difference between sales and operating income. d. difference between sales and total variable cost. e. difference between variable cost and fixed cost.
Using the information for Lighthizer Trading Company, prepare the income statement to include all costs, but separate out uncontrollable costs. Insert subtotals where appropriate (include one for operating income) before the uncontrollable costs. Income tax expense should be based on all expenses (that is, it will be the same amount as in the previous exercise). Calculate net income, profit margin, ROI, and RI excluding uncontrollable expenses. Prepare a short response to accompany the income statement that explains why uncontrollable costs are separated in the income statement.
Which of the following is one of the two approaches used to analyze data in the decision to keep or discontinue a segment? A. comparing contribution margins and fixed costs B. comparing contribution margins and variable costs C. comparing gross margin and variable costs D. comparing total contribution margin under each alternative
Using the information from BDS Enterprises, prepare the income statement to include all costs, but separate out uncontrollable costs. Insert subtotals where appropriate (include one for operating income) before the uncontrollable costs. Income tax expense should be based on all expenses (that is, it will be the same amount as in question 1). Calculate net income, profit margin, ROI, and RI, excluding uncontrollable expenses. Prepare a short response to accompany the income statement that explains why uncontrollable costs are separated in the income statement.
For which cost concept used in applying (he cost-plus, approach to product pricing are fixed manufacturing costs, fixed selling and administrative expenses, and desired profit allowed for in determining the markup? A. Total cost B. Product cost C. Variable cost D. Standard cost
Break-even for a multiple product firm. can be calculated by dividing total fixed costs by the contribution margin of a composite unit can be calculated by multiplying fixed costs by the contribution margin ratio of a composite unit can only be calculated when the proportion of products sold is the same for all products can be calculated by multiplying fixed costs by the contribution margin ratio of the most common product in the sales mix
Explain how a contribution margin income statement can be used to determine profitability.
In a cost-volume-profit analysis, explain what happens at the break-even point and why companies do not want to remain at the break-even point.
The amount of a units sales price that helps to cover fixed expenses is its ____________________. A. contribution margin B. profit C. variable cost D. stepped cost
What is meant by a products contribution margin ratio and how is this ratio useful in planning business operations?
The dollar amount of sales needed to achieve a target operating income is computed by dividingbtarget operating income by the contribution margin ratio True False
When using data from a segmented income statement, the dollar sales for a segment to break even is equal to: Multiple Choice Common fixed expenses ÷ Segment CM ratio Traceable fixed expenses ÷ Segment CM ratio Non-traceable fixed expenses ÷ Segment CM ratio (Traceable fixed expenses + Common fixed expenses) ÷ Segment CM ratio