Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Question
Chapter 7, Problem 16E
(a)
To determine
Determine the contribution margin and contribution margin ratio for each segment of Incorporation TW.
(b)
To determine
Does the segment with the highest contribution margin identified in part a, is the most profitable segment with the highest operating income.
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1. How would a product life-cycle income statement differ from the above income statements?
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Variable Costs, Contribution Margin, Contribution Margin Ratio
Super-Tees Company plans to sell 20,000 T-shirts at $19 each in the coming year. Product costs include:
Direct materials per T-shirt
$6.65
$1.33
Direct labor per T-shirt
Variable overhead per T-shirt
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Total fixed factory overhead
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Variable selling expense is the redemption of a coupon, which averages $0.95 per T-shirt; fixed selling and administrative expenses total $13,000.
Analyzing profitability
Camden Company has divided its business into segments based on sales territories: East Coast, Midland, and West Coast. Following are financial data for 2018:
Prepare an income statement for Camden Company for 2018 using the contribution margin format assuming total fixed costs for the company Were $435,000. Include columns for each business segment and a column for the total company.
Chapter 7 Solutions
Managerial Accounting
Ch. 7 - What types of costs are customarily included in...Ch. 7 - Which type of manufacturing cost (direct...Ch. 7 - Which of the following costs would be included in...Ch. 7 - In the variable costing income statement, how are...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Discuss how financial data prepared on the basis...Ch. 7 - Prob. 8DQCh. 7 - Explain why rewarding sales personnel on the basis...Ch. 7 - Explain why service companies use different...
Ch. 7 - Variable costing Marley Company has the following...Ch. 7 - Prob. 2BECh. 7 - Variable costingsales exceed production The...Ch. 7 - Prob. 4BECh. 7 - Contribution margin by segment The following...Ch. 7 - At the end of the first year of operations, 21,500...Ch. 7 - Gallatin County Motors Inc. assembles and sells...Ch. 7 - Fresno Industries Inc. manufactures and sells...Ch. 7 - On March 31, the end of the first month of...Ch. 7 - On April 30, the end of the first month of...Ch. 7 - On October 31, the end of the first month of...Ch. 7 - The following data were adapted from a recent...Ch. 7 - Estimated income statements, using absorption and...Ch. 7 - The following data were adapted from a recent...Ch. 7 - Prob. 10ECh. 7 - Explain why service companies use different...Ch. 7 - Galaxy Sports Inc. manufactures and sells two...Ch. 7 - Prob. 13ECh. 7 - Sales territory and salesperson profitability...Ch. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Variable costing income statement for a service...Ch. 7 - Variable costing income statement for a service...Ch. 7 - Prob. 1PACh. 7 - The demand for solvent, one of numerous products...Ch. 7 - During the first month of operations ended May 31,...Ch. 7 - Salespersons report and analysis Walthman...Ch. 7 - Segment variable costing income statement and...Ch. 7 - Absorption and variable costing income statements...Ch. 7 - Income statements under absorption costing and...Ch. 7 - Absorption and variable costing income statements...Ch. 7 - Prob. 4PBCh. 7 - Variable costing income statement and effect on...Ch. 7 - Prob. 1MADCh. 7 - Prob. 2MADCh. 7 - Prob. 3MADCh. 7 - Segment disclosure by Apple Inc. (AAPL) provides...Ch. 7 - Prob. 1TIFCh. 7 - Inventory effects under absorption costing BendOR,...Ch. 7 - Communication Bon Jager Inc. manufactures and...Ch. 7 - Prob. 1CMACh. 7 - Chassen Company, a cracker and cookie...Ch. 7 - Prob. 3CMACh. 7 - Bethany Company has just completed the first month...
Knowledge Booster
Similar questions
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- Segment Contribution Margin Analysis The operating revenues of the three largest business segments for Time Warner, Inc., for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in parentheses. Turner (cable networks and digital media) Home Box Office (pay television) Warner Bros. (films, television, and videos) Assume that the variable costs as a percent of sales for each segment are as follows: Turner Home Box Office Warner Bros. Revenues Time Warner, Inc. Segment Revenues (in millions) 38% 30% a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information given. Variable costs Contribution margin $90,000 93,000 27,000 A 28% Turner Home Box Office Warner Bros. LA 000arrow_forwardThe following data are available for X Corp:Gross profit is 20% based on cost. Using ABC, compute the selling price of each unit of Product B?arrow_forwardThe operating revenues of the three largest business segments for Time Warner, Inc., for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in parentheses. Time Warner, Inc.Segment Revenues(in millions) Turner (cable networks and digital media) $90,600 Home Box Office (pay television) 74,100 Warner Bros. (films, television, and videos) 13,300 Assume that the variable costs as a percent of sales for each segment are as follows: Turner 27% Home Box Office 42% Warner Bros. 38% a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information given. Turner Home Box Office Warner Bros. Revenues $ $ $ Variable costs Contribution margin $ $ $…arrow_forward
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- Break-Even Sales and Cost-Volume-Profit Chart Last year Hever Inc. had sales of $1,000,000, based on a unit selling price of $400. The variable cost per unit was $320, and fixed costs were $88,000. The maximum sales within Hever Inc.'s relevant range are 3,200 units. Hever Inc. is considering a proposal to spend an additional $36,000 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity. Required: 1. Construct a cost-volume-profit chart on your own paper, indicating the break-even sales for last year. In your computations, do not round the contribution margin percentage. Break-even sales (dollars) Break-even sales (units) 2. Using the cost-volume-profit chart prepared in part (1), determine (a) the income from operations for last year and (b) the maximum income from operations that could have been realized during the year. In your computations, do not round the contribution margin percentage. Income from operations Maximum income…arrow_forwardThe operating revenues of the three largest business segments for Time Warner, Inc., for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in parentheses. Time Warner, Inc.Segment Revenues(in millions) Turner (cable networks and digital media) $95,600 Home Box Office (pay television) 33,700 Warner Bros. (films, television, and videos) 80,500 Assume that the variable costs as a percent of sales for each segment are as follows: Turner 38% Home Box Office 35% Warner Bros. 50% a Determine the contribution margin and contribution margin ratio for each segment from the information given. Round contribution margin ratio to whole percents for each segment from the information given. Enter all amounts as positive numbers. Turner Home Box Office Warner Bros. Revenues $ $ $ Variable costs Contribution margin $ $ $ Contribution margin ratio (as a percent) % % % b.…arrow_forwardAssume that the organization uses the traditional full cost system, the cost per unit for the product for the coming year will be? (two decimal places, if any)arrow_forward
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