INTRO TO MANAGERIAL ACCT-CONNECT ACCESS
8th Edition
ISBN: 9781260118742
Author: BREWER
Publisher: MCG
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Chapter 7, Problem 10E
Requirement1:
To determine
The Break-even point in terms of dollar sales company as a wholeshall be determined.
Requirement2:
To determine
The break-even point for East segment shall be computed.
Requirement3:
To determine
The break-even point for West Segment shall be computed.
Requirement4:
To determine
The Segmented Income Statement based on break-even sales of segment as computed above shall be made.
To determine
The method of computing the break-even sales for segment is appropriate shall be determined.
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Required:
1. Prepare a contribution format income statement.
2. Prepare a traditional format income statement.
3. Calculate the selling price per unit.
4. Calculate the variable cost per unit.
5. Calculate the contribution margin per unit.
6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales?
Stuart Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A
were eliminated.
Segment
Sales
Cost of goods sold
Sales commissions
Contribution margin.
General fixed operating expenses (allocation of president's salary)
Advertising expense (specific to individual divisions)
Net income (loss)
Complete this question by entering your answers in the tabs below.
Required A Required B
STUART COMPANY
Income Statements for Year 2
Prepare a schedule of relevant sales and costs for Segment A.
Relevant Rev. and Cost items for Segment A
Sales
Cost of goods sold
Sales commissions
Advertising expense
Effect on income
Required
a. Prepare a schedule of relevant sales and costs for Segment A.
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.
$
$ 163,000
(128,000)
(17,000)
0
B
$242,000 $256,000
(78,000)
(28,000)
(86,000)…
Chapter 7 Solutions
INTRO TO MANAGERIAL ACCT-CONNECT ACCESS
Ch. 7 - What is the difference between absorption costing...Ch. 7 - Are selling and administrative expenses treated as...Ch. 7 - Explain how fixed manufacturing overhead costs are...Ch. 7 - What are the arguments in favor of treating fixed...Ch. 7 - What are the arguments in favor of treating fixed...Ch. 7 - Prob. 6QCh. 7 - If the units produced exceed the units sold, which...Ch. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - How does Lean Production reduce or eliminate the...
Ch. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Distinguish between a traceable fixed cost and a...Ch. 7 - Explain how the contribution margin differs from...Ch. 7 - Why aren’t common fixed costs allocated to...Ch. 7 - How is it possible for a fixed cost that ¡s...Ch. 7 - Should a company allocate its common fixed costs...Ch. 7 - Prob. 1AECh. 7 - Prob. 2AECh. 7 - Prob. 3AECh. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 2F15Ch. 7 - Prob. 3F15Ch. 7 - Prob. 4F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 6F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 8F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 10F15Ch. 7 - Prob. 11F15Ch. 7 - Prob. 12F15Ch. 7 - Prob. 13F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 1ECh. 7 - Variable Costing Income Statement; Explanation of...Ch. 7 - Reconciliation of Absorption and Variable Costing...Ch. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Prob. 7ECh. 7 - Deducing Changes ¡n Inventories LO7—3 Parker...Ch. 7 - Variable and Absorption Costing Unit Product Costs...Ch. 7 - Prob. 10ECh. 7 - Segmented Income Statement L07—4 Wingate Company,...Ch. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Variable Costing Unit Product Cost and Income...Ch. 7 - Absorption Costing Unit Product Cost and Income...Ch. 7 - Working with a Segmented Income Statement;...Ch. 7 - Prob. 17ECh. 7 - Prob. 18PCh. 7 - Variable Costing Income Statement; Reconciliation...Ch. 7 - Variable and Absorption Costing Unit Product Costs...Ch. 7 - Segment Reporting and Decision-Making L07—4 Vulcan...Ch. 7 - Prob. 22PCh. 7 - Absorption and Variable Costing; Production...Ch. 7 - Companywide and Segment Break-Even Analysis;...Ch. 7 - Prepare and Interpret Income Statements; Changes...Ch. 7 - Prob. 26PCh. 7 - Variable and Absorption Costing Unit Product Costs...
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- How to calculate profitability analysis?arrow_forwardAnswer the following multiple choice questions and show your work for 8-11 8-7 In a segmented income statement, which of the following statements is true? a. Segment margin is greater than contribution margin. b. Common fixed expenses must be allocated to each segment. c. Contribution margin is equal to sales less all variable and direct fixed expenses of a segment. d. Segment margin is equal to contribution margin less direct and common fixed expenses. e. Segment margin is equal to contribution margin less direct fixed expenses. 8-10 A segment could be which of the following? a. Product b. Customer type c. Geographic region d. All of these. e. None of these. 8-14 In the keep-or-drop decision, the company will find which of the following income statement formats most useful? a. A segmented income statement in the contribution margin format b. A segmented income statement in the full costing format that is used for financial reporting c. An overall income statement in the…arrow_forwardWhen 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 ratioarrow_forward
- practice please help with formulaarrow_forwardAPPLY THE CONCEPTS: Target income (sales revenue) Another useful method for figuring out the type of performance your company will need to reach a target income is by using sales revenue. Rather than using the number of units, this method uses total sales revenue. In companies for which the total set of goods produced and sold is more varied, this would be the preferred method, as opposed to a business in which only one product is sold. Assume a company has pricing and cost information as follows: Price and Cost Information Amount Selling Price per Unit $30 Variable Cost per Unit $15 Total Fixed Cost $15,000 For the upcoming period, the company wishes to generate operating income of $40,000. Given the cost and pricing structure for the company’s product, how much sales revenue must it generate to attain its target income? Step 1: Calculate the contribution margin ratio: The contribution margin ratio is the contribution margin in proportion to the selling price on a…arrow_forwardPlease help me with all answers thankuarrow_forward
- Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, and then compute the missing items.) Required: a. Assume that only one product is being sold in each of the following four case situations: Unit sold Sales Variable expenses Foxed expenses Operating income (loss) Contribution margin per unit $ Case #1 15,000 180,000 $ 100,000 120,000 50,000 $ $ Case #2 Case #1 Case #3 10,000 Case #2 70,000 $ 32,000 8,000 $ 12,000 $ 10 $ 13 Case #4 b. Assume that more than one product is being sold in each of the following four case situations: (Enter "Contribution margin ratio" in percent. Round your final answers to the nearest whole dollar amount.) Case #3 6,000 300,000 100,000 (10,000) Case #4arrow_forwardSome financial information for each of three companies is reflected below in columns A, B, and C. Use your knowledge of CVP relationships to fill in the missing pieces numbered (1) through (9). Consider each company (i.e., column) separately. (Round variable cost per unit and contribution margin ratio to 2 decimal places, e.g. 0.24.) Selling price Total fixed costs Sales volume (units) Variable cost/unit Operating income Tax rate After-tax profit Contribution margin ratio A $4 $12,900 31,000 3720 (1) $21,820 30 % (2) $15,274 34,720 (3) B $750 2,700 $360 25% $692,250 (4) (5) (6) $450,000 $43.20 $262,800 40% 0.55arrow_forwardPlz solve it accurately.arrow_forward
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