ACCOUNTING

  Product Line
  Glass

Division

Flat Glass Auto Glass Specialty Glass
  Sales R R R R
  Variable expenses        
  Contribution margin        
  Traceable fixed expenses:        
      Advertising        
      Depreciation        
      Administration        
  Total        
  Product line segment margin   R R R
  Common fixed expenses        
      Administration        
  Divisional segment margin R      
Requirement 2:
Management is surprised by Specialty Glass’s poor showing and would like to have the product line segmented by market. The following information is available about the two markets in which Specialty Glass is sold:
  Specialty Glass Markets
   
  Domestic Foreign
  Sales R196,000 R98,000
  Traceable fixed expenses:    
  Advertising R39,600 R79,800
  Variable expenses as a percentage of sales 43% 70%
All of Specialty Glass’s depreciation and administration expenses are common to the markets in which the product is sold. Calculate the following for the Specialty Glass product line with segments defined as markets. (Negative amounts should be indicated by a minus sign. Omit the “R” sign in your response.)
  Domestic market segment margin R
  Foreign market segment margin R
  Product line segment margin R
Requirement 3:
(a) Refer to the statement prepared in (Requirement 1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A market study indicates that such a campaign would increase sales of Flat Glass by R200,000 or sales of Auto Glass by R146,000. The campaign would cost R29,000. Calculate the increased net operating income. (Omit the “R” sign in your response.)
  Flat Glass Auto Glass
  Net operating income R R
(b) Which product line should be chosen?
   
  (Click to select)Auto Glass Flat Glass

#11

Wingate Company, a wholesale distributor of videotapes, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement, which follows:

 

   
  Sales $1,520,000
  Variable expenses 544,600
  Contribution margin 975,400
  Fixed expenses 1,073,000
  Net operating income (loss) -$97,600

 

In an effort to isolate the problem, the president has asked for an income statement segmented by division. Accordingly, the Accounting Department has developed the following information:

 

  Division
  East Central West
  Sales $460,000 $600,000 $460,000
  Variable expenses as a

percentage of sales

52% 21% 39%
  Traceable fixed expenses $107,000 $321,000 $208,000

 

Requirement 1:
Prepare a contribution format income statement segmented by divisions, as desired by the president. (Input all amount as positive value except divisional segment loss and net operating loss which should be indicated with a minus sign. Omit the “$” sign in your response.)

 

      Division
  Total

Company

East Central West
  Sales $ $ $ $
  Variable expenses        
  Contribution margin        
  Traceable fixed expenses        
  Divisional segment margin   $ $ $
  Common fixed expenses not

traceable to divisions

       
  Net operating (Click to select)incomeloss $      

 

Requirement 2:

 

(a) As a result of a marketing study, the president believes that sales in the West Division could be increased by 14% if monthly advertising in that division were increased by $21,000. Compute the Incremental net operating income. (Negative amount should be indicated by a minus sign. Omit the “$” sign in your response.)

 

  Incremental net operating income $

 

(b) Would you recommend the increased advertising?
(Click to select)NoYes

#12

Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs.
Assume that Minneapolis’ sales by major market are as follows:
      Market
  Minneapolis Medical Dental
  Sales $510,000 100% $340,000 100% $170,000 100%
  Variable expenses 306,000 60% 221,000 65% 85,000 50%
  Contribution margin 204,000 40% 119,000 35% 85,000 50%
  Traceable fixed expenses 61,200 12% 17,000 5% 44,200 26%
  Market segment margin 142,800 28% $102,000 30% $40,800 24%
  Common fixed expenses

not traceable to markets

15,300 3%        
  Office segment margin $127,500 25%        

 

The company would like to initiate an intensive advertising campaign in one of the two markets during the next month. The campaign would cost $6,800. Marketing studies indicate that such a campaign would increase sales in the Medical market by $59,500 or increase sales in the Dental market by $51,000.
Required:
Determine the increase in net operating income in each market if the advertising campaign were to be initiated in that market. (Omit the “$” sign in your response.)
  Medical Dental
  Increase in net operating income $ $

#13

Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format income statement for the company’s most recent year is given below:

 

      Office
  Total Company Chicago Minneapolis
  Sales $1,050,000 100% $210,000 100% $840,000 100%
  Variable expenses 567,000 54% 63,000 30% 504,000 60%
  Contribution margin 483,000 46% 147,000 70% 336,000 40%
  Traceable fixed expenses 235,200 22% 109,200 52% 126,000 15%
  Office segment margin 247,800 24% $37,800 18% $210,000 25%
  Common fixed expenses not

traceable to offices

168,000 16%        
  Net operating income $79,800 8%        
Requirement 1:
By how much would the company’s net operating income increase if Minneapolis increased its sales by $105,000 per year? Assume no change in cost behavior patterns. (Omit the “$” sign in your response.)

 

  Net operating income $
Refer to the original data. Assume that sales in Chicago increase by $70,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. Prepare a new segmented income statement for the company. (Round your percentage amounts to 2 decimal places. Input all amount as positive value. Omit the “$” and “%” signs in your response.)

 

      Segments
  Total Company Chicago Minneapolis
  Amount % Amount % Amount %
  Sales $   $   $  
  Variable expenses            
  Contribution margin            
  Traceable fixed expenses            
  Office segment margin     $   $  
  Common fixed expenses

not traceable to segments

           
  Net operating income $          

#14

Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

 

  Division A Division B Division C
  Sales $5,100,000 $9,000,000 $8,600,000
  Average operating assets $1,590,000 $5,900,000 $1,500,000
  Net operating income $305,000 $896,000 $330,000
  Minimum required rate of return 20% 23% 22%
Requirement 1:
Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Round all calculations to 2 decimal places, e.g., .1234 as 12.34. Omit the “%” sign in your response.)

 

  ROI
  Division A %
  Division B %
  Division C %
Compute the residual income for each division. (Leave no cells blank, be certain to enter “0” wherever required. Negative amounts should be indicated by a minus sign. Omit the “$” sign in your response.)

 

  Division A Division B Division C
  Residual income $ $ $

#15

Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below (the currency is the Australian dollar, denoted here as $):
  Division
  Queensland New South

Wales

  Sales $1,000,000 $1,750,000
  Average operating assets $500,000 $500,000
  Net operating income $90,000 $105,000
  Property, plant, and equipment (net) $250,000 $200,000

 

Requirement 1:
Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover. (Round all calculations to 2 decimal places. Omit the “%” sign in your response.)
    ROI
  Queensland %
  New South Wales %

 

Requirement 2:
Which divisional manager seems to be doing the better job?

(Click to select) New South WalesQueensland

#16

Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow (in millions of yen, denoted by ¥):
  Division
  Osaka Yokohama
  Sales ¥8,500,000 ¥20,900,000
  Net operating income ¥920,000 ¥2,570,000
  Average operating assets ¥2,800,000 ¥8,300,000

 

Requirement 1:
For each division, compute the return on investment (ROI) in terms of margin and turnover. (Round your answers to 2 decimal places. Omit the “%” sign in your response.)
     Osaka   Yokohama
  Return on investment % %
     

 

Requirement 2:
Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 20%. Compute the residual income for each division. (Omit the “¥” sign in your response.)
     Osaka       Yokohama
  Residual income ¥ ¥
     

 

Requirement 3:
Is Yokohama’s greater amount of residual income an indication that it is better managed?

(Click to select)YesNo

Order now and get 10% discount on all orders above $50 now!!The professional are ready and willing handle your assignment.

ORDER NOW »»