CENGAGENOWV2 FOR WARREN'S FINANCIAL & M
13th Edition
ISBN: 9781305267848
Author: Duchac
Publisher: Cengage Learning
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Chapter 20, Problem 20.5CP
(1)
To determine
Contribution Margin
Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.
To Prepare: The contribution margin by state report for Company TS.
(2)
To determine
The additional profit for each state, if the sales amount increased by 20% and decrease in advertising expenses.
(3)
To determine
To Identify: Which state will provide the greatest profit return for a $42,200 increasing in advertising expenses?
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Bison Creek Company is preparing its annual profit plan. As part of its analysis of the cost of its purchasing activity, management estimates that the $250,000 for purchasing support should be assigned to the individual vendors from the information given as follows:
Vendor A
Vendor B
Vendor C
Units purchased
100,000
100,000
500,000
Purchase orders (annual)
12
24
50
Number of shipments received
12
52
100
Required: a. Allocate the purchasing costs to the three vendors, assuming Bison Creek uses units purchased to compute activity-based costs. b. Allocate the purchasing costs to the three vendors, assuming Bison Creek uses purchases orders to compute activity-based costs. c. Allocate the purchasing costs to the three vendors, assuming Bison Creek uses number of shipments to compute activity-based costs.
Patterson Company operates three segments. Income statements for the segments
imply that profitability could be improved if Segment A were eliminated.
PATTERSON COMPANY
Income Statements for the Year 2014
Segment
Sales
А
В
С
$169,000 $243,000 $258,000
(80,000)
(31,000)
(121,000)
(17,000)
Cost of goods sold
Sales commissions
(88,000)
(30,000)
Contribution margin
General fixed oper. exp. (allocation of
president's salary)
Advertising expense (specific to individual
divisions)
132,000
31,000
140,000
(34,000)
(48,000)
(32,000)
(6,000)
(11,000)
(9,000) $73,000
$108,000
Net income
Required:
a. Prepare a schedule of relevant sales and costs for Segment A.
Relevant Rev. and Cost items for Segment A
Effect on income
b. Prepare comparative income statements for the company as a whole under two
alternatives: (1) the retention of Segment A and (2) the elimination of Segment A.
PATTERSON COMPANY
Comparative Income Statements for the Year 2014
Eliminate Seg. A
Keep Seg.A
Decision
Sales
Cost of goods…
Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated.
BUCKLEY COMPANY
Income Statements for Year 2
Segment
A
B
C
Sales
$
330,000
$
480,000
$
500,000
Cost of goods sold
(242,000
)
(184,000
)
(190,000
)
Sales commissions
(30,000
)
(44,000
)
(44,000
)
Contribution margin
58,000
252,000
266,000
General fixed operating expenses (allocation of president’s salary)
(92,000
)
(92,000
)
(92,000
)
Advertising expense (specific to individual divisions)
(6,000
)
(20,000
)
0
Net income (loss)
$
(40,000
)
$
140,000
$
174,000
Required
Prepare a schedule of relevant sales and costs for Segment A.
Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A.
Options for required A table are: Advertising…
Chapter 20 Solutions
CENGAGENOWV2 FOR WARREN'S FINANCIAL & M
Ch. 20 - What types of costs are customarily included in...Ch. 20 - Which type of manufacturing cost (direct...Ch. 20 - Which of the following costs would be included in...Ch. 20 - In the variable costing income statement, how are...Ch. 20 - Since all costs of operating a business are...Ch. 20 - Discuss how financial data prepared on the basis...Ch. 20 - Why might management analyze product...Ch. 20 - Explain why rewarding sales personnel on the basis...Ch. 20 - Discuss the two factors affecting both sales and...Ch. 20 - How is the quantity factor for an increase or a...
Ch. 20 - Explain why service companies use different...Ch. 20 - Prob. 20.1APECh. 20 - Variable costing Marley Company has the following...Ch. 20 - Variable costingproduction exceeds sales Fixed...Ch. 20 - Variable costingproduction exceeds sales Fixed...Ch. 20 - Variable costingsales exceed production The...Ch. 20 - Variable costing sales exceed production The...Ch. 20 - Analyzing income under absorption and variable...Ch. 20 - Analyzing income under absorption and variable...Ch. 20 - Contribution margin by segment The following...Ch. 20 - Contribution margin by segment The following...Ch. 20 - Contribution margin analysis The actual price for...Ch. 20 - Contribution margin analysis The actual variable...Ch. 20 - Inventory valuation under absorption costing and...Ch. 20 - Income statements under absorption costing and...Ch. 20 - Income statements under absorption costing and...Ch. 20 - Cost of goods manufactured, using variable costing...Ch. 20 - Variable costing income statement On June 50, the...Ch. 20 - Absorption costing income statement On July 31,...Ch. 20 - Variable costing income statement The following...Ch. 20 - Estimated income statements, using absorption and...Ch. 20 - Variable and absorption costing Ansara Company had...Ch. 20 - Variable and absorption costingthree products...Ch. 20 - Prob. 20.11EXCh. 20 - Product profitability analysis Power Train Sports...Ch. 20 - Territory and product profitability analysis Coast...Ch. 20 - Prob. 20.14EXCh. 20 - Segment profitability analysis The marketing...Ch. 20 - Prob. 20.16EXCh. 20 - Prob. 20.17EXCh. 20 - Prob. 20.18EXCh. 20 - Contribution margin analysis variable costs Based...Ch. 20 - Variable costing income statement for a service...Ch. 20 - Contribution margin reporting and analysis for a...Ch. 20 - Variable costing income statement and contribution...Ch. 20 - Prob. 20.1APRCh. 20 - Income statements under absorption costing and...Ch. 20 - Absorption and variable costing income statements...Ch. 20 - Salespersons' report and analysis Walthman...Ch. 20 - Prob. 20.5APRCh. 20 - Contribution margin analysis Dozier Industries...Ch. 20 - Absorption and variable costing income statements...Ch. 20 - Income statements under absorption costing and...Ch. 20 - Absorption and variable costing income statements...Ch. 20 - Salespersons' report and analysis Pachec Inc....Ch. 20 - Prob. 20.5BPRCh. 20 - Contribution margin analysis Mathews Company...Ch. 20 - Prob. 20.1CPCh. 20 - Prob. 20.3CPCh. 20 - Prob. 20.4CPCh. 20 - Prob. 20.5CP
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