(Discontinue or Continue Operating Segment) Beauty and Ugly, a retailing company, has two departments, Hardware and Linens. A recent monthly contribution format income statement for the company follows: Department TotalHardwareLinensSalesP4,000,000

(Discontinue or Continue Operating Segment) Beauty and Ugly, a retailing company, has two departments, Hardware and Linens. A recent monthly contribution format income statement for the company follows: Department TotalHardwareLinensSalesP4,000,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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Bed & Bath, a retailing company, has two departments, Hardware and Linens. The company’s most recentmonthly contribution format income statement follows:DepartmentTotal Hardware LinensSales ................................................ $4,000,000 $3,000,000 $1,000,000Variable expenses ........................... 1,300,000 900,000 400,000Contribution margin .......................... 2,700,000 2,100,000 600,000Fixed expenses ................................ 2,200,000 1,400,000 800,000Net operating income (loss) ............. $ 500,000 $ 700,000 $ (200,000)A study indicates that $340,000 of the fixed expenses being charged to Linens are sunk costs or allocatedcosts that will continue even if the Linens Department is dropped. In addition, the elimination of the LinensDepartment will result in a 10% decrease in the sales of the Hardware Department.Required:If the Linens Department is dropped, what will be the effect on the net operating income of the companyas a whole?
Shown here are annual financial data for a merchandising company and a manufacturing company. Music World Retail Wave-Board Manufacturing Beginning inventory Merchandise Finished goods Cost of merchandise purchased Cost of goods manufactured Ending inventory Merchandise Finished goods $ 200,000 300,000 175,000 $ 500,000 875,000 225,000 Required: Prepare the cost of goods sold section of the income statement for each company.
Background Consider the following information for the company Freddie's Furniture Supplies, who manufacture outdoor furniture: Income Statement Freddie's Furniture Supplies Year Ended 31st December 2020 Net Sales Revenue $290,350 less: COGS $132,560 = Gross Profit $157,790 less: Operating (Non Product) Expenses $85,900 equals: Net Profit $71,890 Beginning and Ending Finished Goods, of the year, were $32,000 and $14,600 respectively. Question What was the COGM (Costs of Goods Manufactured) for Freddie's company for the year ended 31st December 2020? Select one: a. Cannot be calculated with the information provided. O b. COGM = $147,160 O c. COGM = $115,160 O d. COGM = $129,760
Restate the following income statement for a retailer in contribution format. Sales revenue ($100 per unit) $ 91,000 Less cost of goods sold ($58 per unit) 52,780 Gross margin 38,220 Less operating costs: Commissions expense ($7 per unit) $ 6,370 Salaries expense 7,800 Advertising expense 5,900 Shipping expense ($2 per unit) 1,820 21,890 Operating income $ 16,330 Per Unit select an income statement item $enter a dollar amount $enter a dollar amount select an opening name for section one : select an income statement item $enter a dollar amount enter a dollar amount select an income statement item…
retailer has three departments—Housewares, Appliances, and Clothing—and buys advertising that benefits all departments. Advertising expense is $150,000 for the year, and departmental sales for the year follow: Housewares, $356,250; Appliances, $641,250; and Clothing, $427,500. How much advertising expense is allocated to Appliances if allocation is based on departmental sales? a. $37,500 c. $45,000 e. $641,250 b. $67,500 d. $150,000
Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format incomestatement for a recent month for the two games appears below:Claimjumper Makeover TotalSales ............................................ $30,000 $70,000 $100,000Variable expenses ...................... 20,000 50,000 70,000Contribution margin ..................... $10,000 $20,000 30,000Fixed expenses .......................... 24,000Net operating income .................. $ 6,000Required:1. Compute the overall contribution margin (CM) ratio for the company.2. Compute the overall break-even point for the company in sales dollars.3. Verify the overall break-even point for the company by constructing a contribution format incomestatement showing the appropriate levels of sales for the two products.
Can I please get help with this quesiton? The following income statement was drawn from the records of Joel Company, a merchandising firm: JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (2,000 units × $125) $250,000 Cost of goods sold (2,000 units × $65) (130,000) Gross margin 120,000 Sales commissions (10% of sales) (25,000) Administrative salaries expense (30,000) Advertising expense (20,000) Depreciation expense (24,000) Shipping and handling expenses (2,000 units × $1.00) (2,000) Net income $19,000 Required Reconstruct the income statement using the contribution margin format. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent.
A store pays $60 for a set of cookware. Overhead expense on each cookware is 6% of the selling price and the profit is 17% of the selling price. Fill in the missing values in the given merchandizing-calculation table. (Round your answers to two decimal places if needed) Profit (P) Amount ($) Expenses (E) Markup (M) $ Cost (C) Selling Price (S) $ S SA Next Question On cost Markup Rate (%) % On Selling price %
Axler Inc. has only two retail and two wholesale customers. Information relating to each customer for 2020 follows: (Click the icon to view the data.) Requirement Calculate customer-level operating income. Begin by calculating each customer's gross margin. Then calculate the operating income for each customer. (Use parentheses or a minus sign to enter a negative gross margin or a customer-level operating loss. Abbreviations used: cust = customer; oper. = operating.) Wholesale Gross margin West Region Wholesaler East Region Wholesaler Smile Inc. Retail Slide Corp
A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950
Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Additional data concerning the usage of the activities by the various customers are also provided: Required: (Note: Round answers to two decimal places.) 1. Calculate a cost per account per year by dividing the total cost of processing and maintaining checking accounts by the total number of accounts. What is the average fee per month that the bank should charge to cover the costs incurred because of checking accounts? 2. Calculate a cost per account by customer category by using activity rates. 3. Currently, the bank offers free checking to all of its customers. The interest revenues average 90 per account; however, the interest revenues earned per account by category are 80, 100, and 165 for the low-, medium-, and high-balance accounts, respectively. Calculate the average profit per account (average revenue minus average cost from Requirement 1). Then calculate the profit per account by using the revenue per customer type and the unit cost per customer type calculated in Requirement 2. 4. CONCEPTUAL CONNECTION After the analysis in Requirement 3, a vice president recommended eliminating the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than made up for the loss through cross-sales. He presented a survey that showed that 50% of the customers would switch banks if a checking fee were imposed. Explain how you could verify the presidents argument by using ABC.
Mason Inc. has only two retail and two wholesale customers. Information relating to each customer for 2020 follows: (Click the icon to view the data.) Requirement Calculate customer-level operating income. Begin by calculating each customer's gross margin. Then calculate the operating income for each customer. (Use parentheses or a minus sign to enter a negative gross margin or a customer-level operating loss. Abbreviations used: cust = customer; oper. = operating.) Wholesale Gross margin Customer-level operating income (loss) West Region Wholesaler East Region Wholesaler Sloan Inc. Retail Snyder Corp