College Accounting (Book Only): A Career Approach
13th Edition
ISBN: 9781337280570
Author: Scott, Cathy J.
Publisher: South-Western College Pub
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter E, Problem 3P
To determine
Ascertain the departmental margin of Drapery Department for the year ended December 31, 20--.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
[The following information applies to the questions displayed below.]
Suresh Company reports the following segment (department) income results for the year.
Department M Department N Department 0
$ 87,000
$ 47,000
$ 83,000
Department P
$ 69,000
Sales
Expenses
Avoidable
Unavoidable
Income (loss)
Total expenses
M
N
Department
Department
Department
Department
Department
Department
O
P
T
Answer is complete and correct.
Decision
a. If the company plans to eliminate departments that have sales less than avoidable costs, which department(s) would be eliminated?
Keep
Eliminate
Keep
18,800
59,000
77,800
$ 9,200
Keep
Eliminate
47,200
23,400
70,600
$ (23,600)
18,500
6,000
24,500
$ 58,500
23,000
58,500
81,500
$ (12,500)
Department T
$ 42,000
54,000
22,400
76,400
$ (34,400)
Total
$ 328,000
161,500
169,300
330,800
$ (2,800)
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:Â
 Â
  Sales
$
2,070,000
Â
  Variable expenses
Â
895,880
Â
 Â
Â
Â
Â
  Contribution margin
Â
1,174,120
Â
  Fixed expenses
Â
1,319,000
Â
 Â
Â
Â
Â
  Operating loss
$
(144,880
)
 Â
Â
Â
Â
Â
 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:Â
Â
Geographic Market
Â
Â
Â
South
Central
North
  Sales
$
607,000
Â
$
806,000
Â
$
657,000
Â
  Variable expenses as a percentage of sales
Â
50
%
Â
36
%
Â
46
%
  Traceable fixed expenses
$
320,000
Â
$
480,000
Â
$
307,000
Â
Â
Required:1. Prepare a contribution format income statement segmented by geographic market, as requested by the president.
Â
2-a. The company’s sales manager believes that sales in the Central…
The company has been experiencing losses for many months. In an effort to improve performance, management has requested that
the monthly income statement be segmented by sales region. The company's first effort at preparing a segmented income statement
for May is given below.
Sales
Regional expenses (traceable):
Cost of goods sold
Advertising
Salaries
Utilities
Depreciation
chá
Shipping expense
Total regional expenses
Regional income (loss) before corporate expenses
Corporate expenses:
Advertising (general)
General administrative expense
Variable expenses:
Total variable expenses
Traceable fixed expenses:
Total traceable fixed expenses
Common fixed expenses:
Total common fixed expense
Net operating income (loss)
Total Company
Amount
West
$313,000
%
98,000
101,000
51,000
8,800
19,000
13,000
290,800
22,200
Total corporate expenses
Net operating income (loss)
The cost of goods sold and shipping expense are both variable. All other costs are fixed.
Required:
3. Prepare a new contribution…
Chapter E Solutions
College Accounting (Book Only): A Career Approach
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- I am resubmitting this question as I am getting flagged that there is information missing.  Losses have been incurred at Millard Corporation for some time. In an effort to isolate the problem and improve the company’s performance, management has requested that the monthly income statement be segmented by sales region. The company’s first effort at preparing a segmented statement is given below. This statement is for May, the most recent month of activity.   Sales Region  West Central East Sales $ 311,000   $ 803,000   $ 699,000  Regional expenses (traceable):            Cost of goods sold  95,000    243,000    317,000  Advertising  103,000    244,000    235,000  Salaries  52,000    51,000    107,000  Utilities  8,800    15,600    14,400  Depreciation  25,000    31,000    27,000  Shipping expense  12,000    29,000    39,000  Total regional expenses  295,800    613,600    739,400…arrow_forwardBovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: 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: Required: Prepare a contribution format Income statement segmented by geographic market, as requested by the president. 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 15% If monthly advertising is increased by $42, 000. Calculate the incremental net operating income. 2- b. Would you recommend the increased advertising?arrow_forwardBovine Company, a wholesale distributor of DVDs, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement below:Sales $1,500,000 Variable expenses 588,000 Contribution margin 912,000 Fixed expenses 945,000 Net operating loss $ (33,000)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 data:Geographic Market South Central North Sales $400,000 $600,000 $500,000 Variable expenses as a percentage of sales 52% 30% 40% Traceable fixed expenses $240,000 $330,000 $200,000Required: i. Prepare a contribution format income statement segmented by geographic market, as desired by the president. ii. The company’s sales manager believes that sales in the Central geographic market could be increased by 15% if monthly advertising were increased by $25,000. Would you recommend the increased advertising? Show…arrow_forward
- Leander Office Products Inc. produces and sells small storage and organizational products for office use. During the first month of operations, the products sold well. Andrea Leander, the owner of the company, was surprised to see a loss for the month on her income statement. This statement was prepared by a local bookkeeping service recommended to her by her bank manager. The statement follows: LEANDER OFFICE PRODUCTS INC. Income Statement Sales (43,000 units) Variable expenses: Variable cost of goods sold✶ Variable selling and administrative expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses Operating loss $253,700 $116,530 49,880 166,410 87,290 89,586 17,200 106,786 $(19,496) *Consists of direct materials, direct labour, and variable manufacturing overhead. Leander is discouraged over the loss shown for the month, particularly since she had planned to use the statement to encourage investors to purchase shares in the…arrow_forwardLeander Office Products Inc. produces and sells small storage and organizational products for office use. During the first month of operations, the products sold well. Andrea Leander, the owner of the company, was surprised to see a loss for the month on her income statement. This statement was prepared by a local bookkeeping service recommended to her by her bank manager. The statement follows: LEANDER OFFICE PRODUCTS INC. Income Statement Sales (43,000 units) Variable expenses: Variable cost of goods sold*< Variable selling and administrative expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses Operating loss $253,700 $116,530 49,880 166,410 87,290 89,586 17,200 106,786 $(19,496) *Consists of direct materials, direct labour, and variable manufacturing overhead. Leander is discouraged over the loss shown for the month, particularly since she had planned to use the statement to encourage investors to purchase shares in the…arrow_forwardOn the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Children’s Shoes because it reduced income from operations by $10,000. What is the flaw in this decision if it is assumed that fixed costs would not be materially affected by the discontinuance? Foremost Footwear Inc.Product-Line Income StatementFor the Year Ended April 30, 20Y7  Children's Shoes Men's Shoes Women's Shoes Total Sales  $165,000   $300,000   $500,000  $965,000 Costs of goods sold: Variable costs $105,000 $150,000 $220,000 $475,000 Fixed costs 32,000 60,000 120,000 212,000 Total cost of goods sold $137,000 $210,000 $340,000 $687,000 Gross profit $28,000 $90,000 $160,000 $278,000 Selling and adminstrative expenses: Variable selling and admin. expenses $21,000 $45,000 $95,000 $161,000 Fixed selling and admin. expenses 17,000 20,000 25,000 62,000 Total selling and admin. expenses $38,000 $65,000 $120,000 $223,000 Income (loss) from…arrow_forward
- Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss. For Year Ended December 31 Acoustic Electric Sales $ 102,200 $ 84,000 Cost of goods sold 43,975 47,550 Gross profit 58,225 36,450 Expenses   Advertising 4,995 4,290 Depreciation—Equipment 10,100 8,570 Salaries 20,200 17,300 Supplies used 1,990 1,770 Rent 7,035 5,950 Utilities 2,975 2,640 Total expenses 47,295 40,520 Income (loss) $ 10,930 $ (4,070)arrow_forwardVulcan Company’s statement of profit or loss for last month is given below: Statement for profit or loss for the month ended June 30th Revenue £750.000 Less variable expenses £336.000 Contribution margin £414.000 Less fixed expenses £378.000 Operating profit £36.000 Management is disappointed with the company’s performance and is wondering what can be done to improve profits. By examining revenue and cost records, you have determined the following: The company is divided into two sales territories – Northern and Southern. The Northern territory recorded £300,000 in revenue and £156,000 in variable expenses during June; the remaining revenue and variable expenses were recorded in the Southern territory. Fixed expenses of £120,000 and £108,000 are traceable to the Northern and Southern territories, respectively. The rest of the fixed expenses are common to the two territories. The company sells two products – Paks and Tibs. Revenue of Paks and Tibs totalled…arrow_forwardThe division manager of Division B received the following operating income data for the past year: The manager of the division is surprised that the T205 product line is not profitable. The division accountant estimates that dropping the T205 product line will decrease fixed cost of goods sold by $75,000 and decrease fixed selling and administrative expenses by $10,000. Prepare a differential analysis to show whether Division B should drop the T205 product line. What is your recommendation to the manager of Division B?arrow_forward
- Your Retail Store's accountant prepared the following income statement for the ladies' accessories product line: Sales Less: Variable expenses Contribution margin Less: Fixed expenses: Wages Insurance on inventory Advertising $2,975,000 1,398, 250 1,576,750 $1,871,000 59,500 654, 500 1,785,000 Net operating income (loss) $ (208,250) Management is concerned about the loss and is considering dropping the product line. If the product line is dropped, a job has to b- created elsewhere for a long-term employee currently earning an annual salary of $89,250. Requlred: Calculate the increase or decrease in the operating income in both alternatives. Keep Accesories Product Line Drop Accesories Product Line Sales Fixed expenses Net operating income (loss) Should the ladies' accessories product line be dropped?arrow_forwardCheck 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 Companyarrow_forwardBelow are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss. Departmental Income Statements For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic $ 102,500 44,575 57,925 4,985 10,120 19,400 2,010 7,095 3,015 46,625 $ 11,300 Electric $ 84,600 47,350 37,250 4,300 8,600 17,000 1,750 5,976 2,610 41,010 $ (3,780) 1. Prepare a departmental contribution to overhead report 2. Based on contribution to overhead, should the electric guitar department be eliminated?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Operating segments; Author: The Finance Storyteller;https://www.youtube.com/watch?v=8IDQtBn902Q;License: Standard Youtube License