Loose Leaf for Foundations of Financial Management Format: Loose-leaf
17th Edition
ISBN: 9781260464924
Author: BLOCK
Publisher: Mcgraw Hill Publishers
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Chapter 3, Problem 1P
Low Carb Diet Supplement Inc. has two divisions. Division A has a profit of
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Low Carb Diet Supplement Inc. has two divisions. Division A has a profit of $133,000 on sales of $2,010,000. Division B is able to
make only $25,600 on sales of $300,000.
a. Compute the profit margins (return on sales) for each division. (Input your answers as a percent rounded to 2 decimal places.)
Division A
Division B
Profit Margin
b. Based on the profit margins (returns on sales), which division is superior?
O Division A
Division B
Low Carb Diet Supplement Inc. has two divisions. Division A has a profit of $176,000 on sales of $2,490,000. Division B is able to
make only $25,800 on sales of $451,000.
a. Compute the profit margins (return on sales) for each division. (Input your answers as a percent rounded to 2 decimal places.)
Division A
Division B
Profit Margin
%
96
%
Franklin Company operates three segments. Income statements for the segments imply that profitability could be
improved if Segment A were eliminated.
FRANKLIN COMPANY
Income Statements for Year 2
Segment
Sales
Cost of goods sold
Sales commissions
A
B
C
$ 167,000
$ 241,000
$ 245,000
(128,000 )
(90,000)
(19,000)
(23,000)
(79,000)
(22,000)
128,000
144,000
(38,000 )
(39,000)
(35,000 )
(3,000 )
(18,000 )
0
$ (21,000
)
$ 71,000
$ 109,000
Contribution margin
General fixed operating expenses (allocation of
president's salary)
Advertising expense (specific to individual divisions)
20,000
Net income (loss)
Required
Prepare a schedule of relevant sales and costs for Segment A.
Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment
A and (2) the elimination of Segment A.
Chapter 3 Solutions
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
Ch. 3 - If we divide users of ratios into short-term...Ch. 3 - Explain how the Du Pont system of analysis breaks...Ch. 3 - If the accounts receivable turnover ratio is...Ch. 3 - Prob. 4DQCh. 3 - Is there any validity in rule-of-thumb ratios for...Ch. 3 - Why is trend analysis helpful in analyzing ratios?...Ch. 3 - Inflation can have significant effects on income...Ch. 3 - What effect will disinflation following a highly...Ch. 3 - Why might disinflation prove favorable to...Ch. 3 - Comparisons of income can be very difficult for...
Ch. 3 - Low Carb Diet Supplement Inc. has two divisions....Ch. 3 - Database Systems is considering expansion into a...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Dr. Zhivà€go Diagnostics Corp.’s income...Ch. 3 - The Haines Corp. shows the following financial...Ch. 3 - Easter Egg and Poultry Company has $2,000,000 in...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Baker Oats had an asset turnover of 1.6 times per...Ch. 3 - AllState Trucking Co. has the following ratios...Ch. 3 - Front Beam Lighting Company has the following...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Jerry Rice and Grain Stores has $4,780,000 in...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Jim Short’s Company makes clothing for schools....Ch. 3 - The balance sheet for Stud Clothiers is shown...Ch. 3 - The Lancaster Corporation’s income statement is...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - The Global Products Corporation has three...Ch. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - The following information is from Harrelson...Ch. 3 - Using the financial statements for the Snider...Ch. 3 - Given the financial statements for Jones...Ch. 3 - Prob. 2WE
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