Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge p product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) $ 135,000 42,000 24,000 28,000 $ 470,000 201,000 269,000
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- 10 ts Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump follows: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 6 General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars. $ 139,000 55,000 22,000 29,000 107,000 Answer is not complete. $ 95,000 X 43,000* 126,000 13,000 47,000+ Required: What is the financial advantage (disadvantage) of…1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department believes increasing the West Division's monthly advertising by $24,000 will increase that division's sales by 11%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented? 2-b. Would you recommend the increased advertising? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Prepare a contribution format income statement segmented by divisions. Division Central WestQUESTION 1 DotCom Inc. has been experiencing difficulty in selling its sole product, IP-20 since March 2020 as a result of Covid-19 pandemic. Provided below the company's contribution format income statement for the most recent month: RM Sales (19,500 units x RM30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss 585,000 409,500 175,500 180,000 (4.500) Required: b. In order to improve sales, the Sales Manager suggests to reduce 10% of the selling price and increase the monthly advertising budget of RM60,000. He convinces that the action would cause unit sales to double. Evaluate the effect of the changes on the company's monthly net operating income. c. The Production Manager believes that by automating certain operations, the company could reduce variable costs by RM3 per unit and sales would increase by 1/3. However, this decision would increase fixed costs by RM72,000 each month. i. Compute the new break-even point in both units and value. ii.…
- Break-Even Analysis for a Service Company Rotelco is a digital wireless service provider in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of $52,800. Costs and expenses for the year were as follows: Cost of revenue Selling, general, and administrative expenses Depreciation $25,300 14,300 5,800 Assume that 75% of the cost of revenue and 30% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations to two decimal place and final answers to the nearest whole number. a. What is Rotelco's break-even number of accounts, using the data and assumptions above? accounts b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant? per accountExercise 13-2 (Algo) Dropping or Retaining a Segment [LO13-2] The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Total $ 923,000 467,000 456, 000 Required 1 Advertising, traceable. Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) *Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required 2 Required 3 70, 500 44, 100 Dirt Bikes $ 265,000 111, 000 154,000 114, 500 184, 600 413, 700 $ 42,300 Complete this question by entering your answers in the tabs…EXERCISE 6-15 Dropping or Retaining a Segment L06-2 encing losses on its bilge pump product line for several years. The most recent quarterly contribu- Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experi- tion format income statement for the bilge pump product line follows: Sales. Variable expenses: Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 Variable manufacturing expenses. aindly Sales commissions. Shipping..... buldott Total variable expenses. Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value). General factory overhead.. Salary of product-line manager 91 Insurance on inventories.. 21Purchasing department. 1d Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. + Common costs allocated on the basis of sales dollars. $330,000 42,000 18,000 270,000 80,000 105,000* 32,000 8,000 45,000+…
- Exercise 11-2 (Algo) Dropping or Retaining a Segment [LO11-2] The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Sales Variable manufacturing and selling expenses Contribution margin Fixed expenses: Advertising, traceable Depreciation of special equipment Salaries of product-line managers Allocated common fixed expenses* Total fixed expenses Net operating income (loss) *Allocated on the basis of sales dollars. Total $ 923,000 483,000 440,000 69,300 43,300 Required 1 114,400 184,600 411,600 $ 28,400 Required 2 Required 3 Dirt Bikes $ 264,000 119,000 145,000 8,500 20, 200 40,500 52,800 122,000 $ 23,000 Complete this question by entering your answers in the tabs below. Mountain Bikes $ 403,000 204,000 199,000 Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special…Exercise 5-1 (Algo) The Effect of Changes in Sales Volume on Net Operating Income [LO5-1] Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (7,300 units) $ 240,900 $ 33.00 Variable expenses 131,400 18.00 Contribution margin 109,500 $ 15.00 Fixed expenses 54,800 Net operating income $ 54,700 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 40 units? 2. What would be the revised net operating income per month if the sales volume decreases by 40 units? 3. What would be the revised net operating income per month if the sales volume is 6,300 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating incomeExercise 11-2 (Algo) Dropping or Retaining a Segment [LO11-2] The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: \table[[,,,Mountain,],[Sales,Total,Dirt Bikes,Bikes,Racing Bikes],[Variable manufacturing and selling expenses,$929,000,$269,000,$400,000,$260,000
- Break-Even Analysis for a Service Company Rotelco is a digital wireless service provider in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of $40,100. Costs and expenses for the year were as follows: Cost of revenue $18,400 Selling, general, and administrative expenses 11,600 Depreciation 4,400 Assume that 65% of the cost of revenue and 40% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations to two decimal place and final answers to the nearest whole number. a. What is Rotelco's break-even number of accounts, using the data and assumptions above? fill in the blank accounts b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant? $ fill in the blank per accountExercise 6-1 (Algo) The Effect of Changes in Sales Volume on Net Operating Income [LO6-1] Whirly Corporation's contribution format income statement for the most recent month is shown below: Per Unit $31.00 19.00 $ 12.00 Sales (7,300 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 226,300 138,700 87,600 Required: (Consider each case independently): 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income 54,500 $ 33,100 1. What would be the revised net operating income per month if the sales volume increases by 100 units? 2. What would be the revised net operating income per month if the sales volume decreases by 100 units? 3. What would be the revised net operating income per month if the sales volume is 6,300 units?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?