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Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: Sales Variable expenses Contribution margin Fixed expenses Operating loss $2,170,000 860,440 1,309,560 1,339,000 $ (29,440) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: Sales Variable expenses as a percentage of sales Traceable fixed expenses Sales Variable expenses Contribution margin Traceable fixed expenses Geographic market segment margin Common fixed expenses not traceable to geographic markets Operating income Incremental net operating income South $617,000 $359,000 Required: 1. Prepare a contribution format income statement segmented by geographic market, as requested by the president. North Geographic Market Central $816,000 $737,000 30% 40% $547,000 $317,000 $ 52% Total Company $ 0 0 0 $ South Geographic Market Central 0 0 $ 0 0 $ North 0 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 15% If monthly advertising is increased by $42,000. Calculate the incremental net operating income.

Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: Sales Variable expenses Contribution margin Fixed expenses Operating loss $2,170,000 860,440 1,309,560 1,339,000 $ (29,440) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: Sales Variable expenses as a percentage of sales Traceable fixed expenses Sales Variable expenses Contribution margin Traceable fixed expenses Geographic market segment margin Common fixed expenses not traceable to geographic markets Operating income Incremental net operating income South $617,000 $359,000 Required: 1. Prepare a contribution format income statement segmented by geographic market, as requested by the president. North Geographic Market Central $816,000 $737,000 30% 40% $547,000 $317,000 $ 52% Total Company $ 0 0 0 $ South Geographic Market Central 0 0 $ 0 0 $ North 0 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 15% If monthly advertising is increased by $42,000. Calculate the incremental net operating income.

College Accounting (Book Only): A Career Approach
College Accounting (Book Only): A Career Approach
13th Edition
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
ChapterE: Departmental Accounting
Section: Chapter Questions
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Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: Required: Prepare a contribution format Income statement segmented by geographic market, as requested by the president. 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 15% If monthly advertising is increased by $42, 000. Calculate the incremental net operating income. 2- b. Would you recommend the increased advertising?
Transcribed Image Text:Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: Required: Prepare a contribution format Income statement segmented by geographic market, as requested by the president. 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 15% If monthly advertising is increased by $42, 000. Calculate the incremental net operating income. 2- b. Would you recommend the increased advertising?
Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: Sales Variable expenses Contribution margin Fixed expenses Operating loss $2,170,000 860,440 1,309,560 1,339,000 $ (29,440) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: Sales Variable expenses as a percentage of sales Traceable fixed expenses Sales Variable expenses Contribution margin Traceable fixed expenses Geographic market segment margin Common fixed expenses not traceable to geographic markets Operating income Incremental net operating income North Geographic Market South Central $617,000 $816,000 $737,000 30% 40% $359,000 $547,000 $317,000 Required: 1. Prepare a contribution format income statement segmented by geographic market, as requested by the president. 52% Total Company $ $ 0 0 0 $ South Geographic Market Central 0 0 $ 0 0 $ North 0 0 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 15% If monthly advertising is increased by $42,000. Calculate the incremental net operating income.
Transcribed Image Text:Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: Sales Variable expenses Contribution margin Fixed expenses Operating loss $2,170,000 860,440 1,309,560 1,339,000 $ (29,440) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: Sales Variable expenses as a percentage of sales Traceable fixed expenses Sales Variable expenses Contribution margin Traceable fixed expenses Geographic market segment margin Common fixed expenses not traceable to geographic markets Operating income Incremental net operating income North Geographic Market South Central $617,000 $816,000 $737,000 30% 40% $359,000 $547,000 $317,000 Required: 1. Prepare a contribution format income statement segmented by geographic market, as requested by the president. 52% Total Company $ $ 0 0 0 $ South Geographic Market Central 0 0 $ 0 0 $ North 0 0 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 15% If monthly advertising is increased by $42,000. Calculate the incremental net operating income.
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