a. 2. Interpret the report.Paul earns thebecause he sells thecontribution margin and has theunits, has amanufacturing margin. Steve also sells products with acommission rate. Colleen has thebut at asalespersons. Although Rene has a high variable cost of goods sold and also sells products with aprice per unit, she has the secondtotal contribution margin.Havasu Off-Road Inc.Contribution Margin by Territoryb. 1. Prepare a contribution margin by territory report. Compute the contribution margin for each territory as a percent, rounded toone decimal place.Contribution margin ratioNortheast%contribution margin ratio. This iscommission rate, and sells a product mix with aaverage manufacturing margincontribution margin ratio among the fourSouthwest%average salesb. 2. Interpret the report,The Southwest Region has $more sales and $salesperson with the highest sales unit volume, has thetheperformance, even though it also has the salesperson with theratio. The Northeast Region contribution margin isperformance ofmore contribution margin. In the Southwest Region, thecontribution margin ratio. The Southwest Region hascontribution marginthan the Southwest Region because of the outstanding Sales Territory and Salesperson Profitability AnalysisHavasu Off-Road Inc. manufactures and sells a variety of commercial vehicles in the Northeast and Southwest regions. There are twosalespersons assigned to each territory. Higher commission rates go to the most experienced salespersons. The following salesstatistics are available for each salesperson:Average per unit:Sales priceVariable cost of goods soldCommission rateUnits soldManufacturing margin ratioContribution margin ratioRene%Steve%NortheastReneColleenSteve%$15,500 $16,000 $14,000 $18,000$9,300$8,000 $8,400$9,0008%12%10%3640%$2450%a. 1. Prepare a contribution margin by salesperson report. Compute the contribution margin ratio for each salesperson.Havasu Off-Road Inc.Contribution Margin by SalespersonPaulSouthwestColleen%Paul4040%8%6050%

Preapation of contribution margin salesperson report and ratio for each salesperson. Havasu…

a. 2. Interpret the report. Paul earns the because he sells the contribution margin and has the units, has a manufacturing margin. Steve also sells products with a commission rate. Colleen has the but at a salespersons. Although Rene has a high variable cost of goods sold and also sells products with a price per unit, she has the second total contribution margin. b. 1. Prepare a contribution margin by territory report. Compute the contribution margin for each territory as a percent, rounded to one decimal place. Havasu Off-Road Inc. Contribution Margin by Territory Contribution margin ratio b. 2. Interpret the report. Northeast % contribution margin ratio. This is commission rate, and sells a product mix with a average manufacturing margin contribution margin ratio among the four average sal Southwest % more contribution margin. In the Southwest Region, the contribution margin ratio. The Southwest Region has contribution margim The Southwest Region has more sales and $ salesperson with the highest sales unit volume, has the the performance, even though it also has the salesperson with the ratio. The Northeast Region contribution margin is performance of than the Southwest Region because of the outstanding

a. 2. Interpret the report. Paul earns the because he sells the contribution margin and has the units, has a manufacturing margin. Steve also sells products with a commission rate. Colleen has the but at a salespersons. Although Rene has a high variable cost of goods sold and also sells products with a price per unit, she has the second total contribution margin. b. 1. Prepare a contribution margin by territory report. Compute the contribution margin for each territory as a percent, rounded to one decimal place. Havasu Off-Road Inc. Contribution Margin by Territory Contribution margin ratio b. 2. Interpret the report. Northeast % contribution margin ratio. This is commission rate, and sells a product mix with a average manufacturing margin contribution margin ratio among the four average sal Southwest % more contribution margin. In the Southwest Region, the contribution margin ratio. The Southwest Region has contribution margim The Southwest Region has more sales and $ salesperson with the highest sales unit volume, has the the performance, even though it also has the salesperson with the ratio. The Northeast Region contribution margin is performance of than the Southwest Region because of the outstanding

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 14E: Sales territory and salesperson profitability analysis Havasu Off-Road Inc. manufactures and sells a...

See similar textbooks

Similar questions

Sales territory and salesperson profitability analysis Reyes Industries Inc. manufactures and sells a variety of commercial vehicles in the Northeast and South west regions. There are two salespersons assigned to each territory. Highercommission rates go to the most experienced salespersons. The following sales statisticsare available for each salesperson: Northeast Southwest Cassy G. Todd Tim JeffAverage per unit:Sales price . . . . . . . . . . . . . . . . . . . . . . . . . $96,000 $84,000 $108,000 $78,000Variable cost of goods sold . . . . . . . . . . . 57,600 33,600 64,800 31,200Commission rate . . . . . . . . . . . . . . . . . . . . .12% 16% 16% 12%Units sold . . . . . . . . . . . . . . . . . . . . . . . . . . .28 24 24 38Manufacturing margin ratio . . . . . .…
Territory and Product Profitability Analysis Pipeline Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboards are sold in two regions, East Coast and West Coast. Information about the two surfboards is as follows: Atlantic Wave Pacific Pounder Sales price Variable cost of goods sold per unit Manufacturing margin per unit Variable selling expense per unit Contribution margin per unit The sales unit volume for the sales territories and products for the period is as follows: East Coast West Coast 2,960 Line Item Description Sales Variable cost of goods sold Manufacturing margin Variable selling expenses Contribution margin 0 Pipeline Surfboards Inc. Contribution Margin by Territory Contribution margin ratio 1,480 1,480 Atlantic Wave a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory. Round contribution margin ratio answers to two decimal places. $ $300 (111) $189…
Sales Territory and Salesperson Profitability Analysis Havasu Off-Road Inc. manufactures and sells a variety of commercial vehicles in the Northeast and Southwest regions. There are two salespersons assigned to each territory. Higher commission rates go to the most experienced salespersons. The following sales statistics are available for each salesperson: Average per unit Sales price Variable cost of goods sold Manufacturing margin cat Northeast Southwest Rene Steve Colleen Paul $15,500 $16,000 $14,000 $18,000 $8,000 $5,400 19.000 n 126 10% 60 a a. 1. Prepare a contribution margin by salesperson report. Compute the contribution margin ratio for each salesperson.
Territory and Product Profitability Analysis Pipeline Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboards are sold in two regions, East Coast and West Coast. Information about the two surfboards is as follows: Atlantic Wave Pacific Pounder Sales price Variable cost of goods sold per unit Manufacturing margin per unit Variable selling expense per unit Contribution margin per unit) The sales unit volume for the sales territories and products for the period is as follows: East Coast West Coast 2,460 1,230 1,230 Atlantic Wave Pacific Pounder 0 Pipeline Surfboards Inc. Contribution Margin by Territory Line Item Description Salee $450 (167) $283 (184) $99 a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory. Round contribution margin ratio answers to two decimal places. $400 (188) $212 (100) $112 East Coast West Coast
Evaluating selling and administrative cost allocations Gordon Gecco Furniture Company has two major product lines with the following characteristics: Commercial office furniture: Few large orders, little advertising support, shipments in full truckloads, and low handling complexity Home office furniture: Many small orders, large advertising support, shipments in partial truckloads, and high handling complexity The company produced the following profitability report for management: The selling and administrative expenses are allocated to the products on the basis of relative sales dollars. Evaluate the accuracy of this report and recommend an alternative approach.
Salespersons report and analysis Pachec Inc. employs seven salespersons to sell and distribute its product throughout the state. Data taken from reports received from the salespersons during the year ended June 30 are as follows: Instructions 1. Prepare a table indicating contribution margin, variable cost of goods sold as a percent of sales, variable selling expenses as a percent of sales, and contribution margin ratio by salesperson. 2. Which salesperson generated the highest contribution margin ratio for the year and why? 3. Briefly list factors other than contribution margin that should be considered in evaluating the performance of salespersons.
APPLY 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…
TB Problem 12-90 Midtown Retail operates a retail store... Midtown Retail operates a retail store in Kansas City, MO., and St. Louis, MO. The following information relates to the Kansas City facility: • The store sold 61,800 units at $34.00 each, after having purchased the units from various suppliers for $26.50. Kansas City salespeople are paid a 1% commission based on gross sales dollars. • Kansas City's sales manager oversees the placement of local advertising contracts, which totaled $70,000 for the year. Local property taxes amounted to $30,500. • The sales manager's $81,000 salarv is set by Kansas City's store manager. In contrast, the store manager's $150,000 salary is determined by Midtown's vice president. • Kansas City incurred $14,800 of other noncontrollable costs. • Nontraceable (common) corporate overhead totaled $84,000. ok nt ences Midtown's corporate headquarters is located in St. Louis, and the company uses responsibility accounting to evaluate performance. Required:…
Activity-Based Customer-Driven Costs Suppose that Stillwater Designs has two classes of distributors: JITdistributors and non -JIT distributors. The JIT distributor places small,frequent orders, and the non -JIT distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product.Stillwater Designs provides the following information about customer-related activities and costs for the most recent quarter: Required:1. Calculate the total revenues per distributor category, and assignthe customer costs to each distributor type by using revenues asthe allocation base. Selling price for one unit is $150. 2. CONCEPTUAL CONNECTION Calculate the customer cost perdistributor type using activity-based cost assignments. Discuss themerits of offering the non -JIT distributors a $2 price decrease(assume that they are agitating for a price concession). 3. CONCEPTUAL CONNECTION Assume that the JIT distributors are simply imposing the frequent orders on…
Crossfire Company segments its business into two regions—East and West. The company prepared a contribution format segmented income statement as shown below: Required:1. Compute the companywide break-even point in dollar sales.2. Compute the break-even point in dollar sales for the East region.3. Compute the break-even point in dollar sales for the West region.4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. Use the same format as shown above. What is Crossfire’s net operating income (loss) in your new segmented income statement?5. Do you think that Crossfire should allocate its common fixed expenses to the East and West regions when computing the break-even points for each region? Why?
What can the weighted average contribution margin ratio be used for? Multiple Choice To solve for a measure, at any level of sales volume, of the sensitivity of operating profit to changes in volume. Breakeven and profit planning for sales volume expressed in dollars (Y) rather than units (Q). To calculate an average per-unit contribution margin based on an assumed sales mix. To figure out the relative proportion in which a company’s products (or services) are sold. To determine the extent of fixed costs in an organization’s cost structure.
Requirements Dialog content starts 1. Allocate revenue from the sale of each unit of Dynamic Duo to Smarty and Sublime using the following: a. The stand-alone revenue-allocation method based on selling price of each product b. The incremental revenue-allocation method, with Smarty ranked as the primary product c. The incremental revenue-allocation method, with Sublime ranked as the primary product d. The Shapley value method 2. Of the four methods in requirement 1, which one would you recommend for allocating Paris's revenues to Smarty and Sublime? Explain.