Gion Company is considering ellminating its Windows division, which reported a loss for the prior year of $92000 as shown below.Segment Income (Loss)SalesVariable costsContribution marginFixed costsIncome (loss)$ 1,122,000987,000135,000232,000$ (97,000)If the Windows division is dropped, all of its variable costs are avoidable, and $150,800 of its fixed costs are avoidable. The impact on Glon's operating income fromeliminating this business segment would be

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Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $97,000 as shown

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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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) $ 1,600,000 700,400 899,600 990,000 $ (90,400) 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: Sales Variable expenses as a percentage of sales. Traceable fixed expenses East $ 440,000 $ 280,000 52% Division Central $ 620,000 $ 320,000 36% West $ 540,000 46% $ 195,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $21,000 based on the belief that it would increase that division's sales by 15%. Assuming these estimates are accurate, how much…
Sanra company is considering eliminating its mountain bike division, which reported an operating loss for the recent year of 3,000. The division sales for the year were 1,050,000 and the variable costs were 860,000. The fixed costs of the division were 193,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be: a.57,900 decrease b.132,100 decrease c.54,900 decrease d.190,000 increase e.190,000 decrease
Jones Corporation switched from the LIFO method of costing inventories to the FIFO method at the beginning of 20X1. The LIFO inventory at the end of 20X0 would have been $80,000 higher using FIFO. Reported retained earnings at the end of 20X0 were $1,750,000. Jones’s tax rate is 21%. Tax law requires a company using LIFO for tax purposes to use it for financial reporting as well. So, when Jones changes from LIFO to FIFO, it will have to do the same for tax purposes. Further, Jones must recognize taxable income equal to the amount by which it increases the inventory valuation when it makes the change. As a result, Jones will pay tax on an additional $80,000 of taxable income in 20X1. Required: Calculate the balance in retained earnings at the time of the change (beginning of 20X1) as it would have been reported had FIFO been previously used. Prepare the journal entry to record the change in accounting principle at the beginning of 20X1.
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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 $ 1,610,000 551,400 Net operating income (loss) 1,058,600 1,164,000 $ (105,400) 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: Sales East $410,000 Division Central $ 670,000 West $530,000 Variable expenses as a percentage of sales Traceable fixed expenses 52% 22% 36% $ 278,000 $ 326,000 $ 200,000 Required: 1. Prepare a contribution format Income statement segmented by divisions. 2-8. The Marketing Department has proposed increasing the West Division's monthly advertising by $27,000 based on the belief that it would increase that division's sales by 13%. Assuming these estimates are accurate, how much…
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Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the years 2012 through 2019. Due primarily to increased competition and price slashing in the industry, 2020’s income statement reported a loss of $20 million. Just before the end of the 2021 fiscal year, a memo from the company’s chief financial officer (CFO) to Jim Fielding, the company controller, included the following comments:If we don’t do something about the large amount of unsold computers already manufactured, our auditors will require us to record a write-down. The resulting loss for 2021 will cause a violation of our debt covenants and force the company into bankruptcy. I suggest that you ship half of our inventory to J.B. Sales, Inc., in Oklahoma City. I know the company’s president, and he will accept the inventory and acknowledge the shipment as a purchase. We can record the sale in 2021 which will boost our loss to a profit. Then J.B. Sales will simply…
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