Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The company'sannual income statement, is as follows:SalesVariable expensesContribution marginAdvertising expenseDepreciation expenseCorporate expensesTotal fixed expensesOperating income(a)ensesmarginDirect fixed expensesrginC$2,247.000 $1,404,000 $1,809,300$5,460,3001,632,000600,4001,095,2003,327,600$615,000$803,600 $714,100$2,132,700$517.000$430,000 $520,000 $1,467,00015,90046,50093,900105,000280,500$626,800$645,600 $1,794,000$(11,800)$68,500$338,700AAdvertising expense - Specific to each product.Depreciation expense - Specific to each product; no other use available, no resale value.Corporate expenses - Allocated based on number of employees.Restate the income statement in segment margin format.Common fixed expenses1:ofitB$10,000$81,600$521,600$282,00020,600ATotal$B

Differential analysis is a management accounting technique in which we assess only the changes in…

Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The com annual income statement, is as follows: Sales Variable expenses Contribution margin Advertising expense Depreciation expense Corporate expenses A B $2,247.000 $1,404,000 1,632,000 600,400 $615.000 $803,600 $517,000 $430,000 10,000 15,900 93 900 81.600 Total $1,809,300 $5,460,300 1,095,200 3,327,600 $714,100 $2,132,700 $520,000 $1,467,000 46,500 C 20,600 105.000 280 500

Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The com annual income statement, is as follows: Sales Variable expenses Contribution margin Advertising expense Depreciation expense Corporate expenses A B $2,247.000 $1,404,000 1,632,000 600,400 $615.000 $803,600 $517,000 $430,000 10,000 15,900 93 900 81.600 Total $1,809,300 $5,460,300 1,095,200 3,327,600 $714,100 $2,132,700 $520,000 $1,467,000 46,500 C 20,600 105.000 280 500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as follows: Sales Variable expenses Contribution margin Advertising expense Depreciation expense Corporate expenses Total fixed expenses Operating income A $2,247,000 1,632,000 $615,000 $517,000 15,900 93,900 $626,800 $(11,800) B $1,404,000 600,400 $803,600 $430,000 10,000 81,600 $521,600 $282,000 C $1,809,300 1,095,200 $714,100 $520,000 20,600 105,000 $645,600 $68,500 Total $5,460,300 3,327,600 $2,132,700 $1,467,000 46,500 280,500 $1,794,000 $338,700 Advertising expense - Specific to each product. Depreciation expense - Specific to each product; no other use available, no resale value. Corporate expenses - Allocated based on number of employees.
Management and accounting Spencer Company is considering closing one of its product lines. Current data on the product line is as follows:DescriptionSales revenue $20,000Variable costs$17,000Direct avoidable fxed costs $7,000Indirect allocated fxed costs $5,000Net Income Loss on the product line ($9,000) *The direct avoidable fxed costs will be eliminated if the product line is closed. **The indirect allocated fxed costs will remain the same whether the product line is continued or closed.In addition, if Spencer closes the product line, Spencer can sublease its production facility to another company and earn subleaserevenue of $2,700 per year. Assume that Spencer decides to discontinue this product line. By how much will overall company net income change? Company net income will INCREASE by $9000Company net income will DECREASE by $9000Company net income will DECREASE by $6700Company net income will INCREASE by $6700
A segment of a company reports the following loss for the year. All $178,500 of its variable costs are avoidable, and $110,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 255,000 178,500 76,500 115,000 (38,500) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Complete this question by entering your answers in the tabs below. Required A Required B Compute the income increase or decrease from eliminating this segment. Segment Elimination Analysis Income Increase (Decrease) Sales Variable costs Contribution margin Fixed costs Income (loss) Continue Eliminate $ 255,000 178,500 76,500 115,000 $ (38,500)
The income statement of product Hammer, one of the several product being sold Tony Companyshows a sales revenue of P184,000 and a total cost and expenses amounting to P211,600. Fixedcosts amounted to P86,480, P49,680 of which are unavoidable regardless of whether the product willbe dropped or not. a. What is the product elimination point (shutdown) point (round to nearest hundred thousand)? b. If in the next year, it is estimated that the revenue from Product Hammer would only be P100,000,should the company continue or drop the product line?
Check m 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 $2,050,000 876,050 1,173,950 1,315,000 $ (141,050) Operating loss 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: Geographic Market Central South North Sales Variable expenses as a percentage of sales Traceable fixed expenses $605,000 $804,000 $641,000 34% $315,000 $500,000 $305,000 53% 44% Required: 1. Prepare a contribution format income statement segmented by geographic market, as requested by the president Geographic Market Total South Central North Company
ducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fmycstate.cincinnatistate.edu %252Fweba Wingate Company, a wholesale distributor of electronic equipment, 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 Net operating income (loss) Sales Variable expenses as a percentage of sales Traceable fixed expenses In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: $ 1,603,000 673,540 929,460 1,022,000 $ (92,540) Req 1 Req 2A East $ 403,000 Complete this question by entering your answers in the tabs below. Req 2B 58% $ 251,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly…
Accounting Gosnell Company produces two products: squares and circles. The projected income for thecoming year, segmented by product line, follows:Squares Circles TotalSales P300,000 P2,500,000 P2,800,000Less: Variable expenses 100,000 500,000 600,000Contribution margin P200,000 P2,000,000 P2,200,000Less: Direct fixed expenses 28,000 1,500,000 1,528,000Product margin P172,000 P 500,000 P 672,000Less: Common fixedexpenses100,000Operating expenses P 572,000The selling prices are P30 for squares and P50 for circles.1. Compute the number of units of each product that must be sold for Gosnell Companyto break even.2. Assume that the marketing manager changes the sales mix of the two products sothat the ratio is three squares to five circles. Repeat Requirement 13. Refer to the original data. Suppose that Gosnell can increase the sales of squares withincreased advertising. The extra advertising would cost an additional P45,000, andsome of the potential purchasers of circles would switch to…
The Alligator segment of Wildhorse Specialty Meats is operating at a loss and has the following data: Sales Variable expenses Fixed expenses $7320007 512400 366000 If the Alligator segment is eliminated, what will be the effect on the remaining company? Assume that 50% of the fixed expenses will be eliminated and the rest will be allocated to the segments of the remaining company. O $439200 increase. O $36600 decrease. O $36600 increase. O $183000 increase.
A segment of a company reports the following loss for the year. All $192,500 of its variable costs are avoidable, and $93,000 of its fixed costs are avoidable. Segment Income (Loss) Sales $ 275,000 Variable costs 192,500 Contribution margin 82,500 Fixed costs 101,000 Income (loss) (18,500) (a) Compute the income increase or decrease from eliminating this segment.(b) Should the segment be eliminated?
mars The manager of Q Corporation is recommending the closure of Branch B in order to eliminate its net loss of P33,750. The income statement shows: Home Branch Branch Office B Sales P800,000 P300,000 P500,000 P400,000 P120,000 P250,000 30,000 20,000 56,250 Cost of sales Operating expenses directly related to sales Operating expenses indirectly related to sales General & administrative expenses allocated Total costs & expenses 80,000 80,000 90,000 110,000 93,750 P720,000 P226,250 P533,750 P73,750 P(33,750) 150,000 P80,000 Operating income If Branch B is closed, one personnel (with salary of P30,000) have to be transferred to the home office. Branch B has furniture costing P120,000 and with an estimated useful life of 5 years has to be transferred also to the home office. REQUIRED: 1. Do you agree with the manager? Explain.
The following are the respective costs and revenues incurred by USA company: costs for months 1, 2, 3: $80,000.00, $90,000.00, $100,000.00 Revenues for months 2, 3, 4: $70,000.00, $95,000.00 $105,000.00 The USA company wants to know from you if it has made any profit or not. What will be your answer and explain? Use interest= 12%
The following information is for X Company's two products - A and B: Sales Total contribution margin Fixed costs: Submit Angus Tres 012 Tring Avoidable Unavoidable Profit Product A $93,000 39,990 21,000 5,000 $13,990 Product B $92,000 36,800 26,500 30,000 $-19,700 The company is considering dropping Product B because of the $19,700 loss. If X Company drops Product B, it will use the freed-up resources to increase sales of Product A by $16,000. If X Company drops Product B and increases sales of A, firm profits will change by