Answered

Discover the answers you need at Westonci.ca, where experts provide clear and concise information on various topics. Explore a wealth of knowledge from professionals across different disciplines on our comprehensive platform. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

een experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales $ 1,589,000 Variable expenses 616,020 Contribution margin 972,980 Fixed expenses 1,070,000 Net operating income (loss) $ (97,020) 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: Division East Central West Sales $ 369,000 $ 700,000 $ 520,000 Variable expenses as a percentage of sales 58 % 24 % 45 % Traceable fixed expenses $ 292,000 $ 332,000 $ 207,000 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 18%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented

Sagot :

anthougo

Answer:

Wingate Company

1. Contribution format Income Statement segmented by divisions:

Division                                       East        Central         West      Company

Sales                                    $ 369,000 $ 700,000 $ 520,000 $1,589,000

Variable expenses                  214,020     168,000     234,000      616,020

Contribution margin               154,980     532,000    286,000      972,980

Traceable fixed expenses    292,000     332,000    207,000       831,000

Segment income (loss)         (137,020)    200,000      79,000        141,980

Non-traceable fixed costs                                                              239,000

Net operating income (loss)                                                          ($97,020)

2-a. Contribution format Income Statement segmented by divisions:

Division                                       East        Central         West      Company

Sales                                    $ 369,000 $ 700,000  $ 613,600 $1,682,600

Variable expenses                  214,020     168,000      276,120      658,140

Contribution margin               154,980     532,000     337,480   1,024,460

Traceable fixed expenses    292,000     332,000    228,000      852,000

Segment income (loss)         (137,020)    200,000     109,480       172,460

Non-traceable fixed costs                                                               239,000

Net operating income (loss)                                                          ($66,540)

2-b. The net operating loss decreased from $97,020 to $66,540, a difference of $30,480.

Explanation:

a) Data and Calculations:

Wingate's most recent monthly

Contribution-format Income Statement:

Sales                                   $ 1,589,000

Variable expenses                   616,020

Contribution margin                972,980

Fixed expenses                     1,070,000

Net operating income (loss) $ (97,020)

Additional information:

Division                                       East        Central         West

Sales                                    $ 369,000 $ 700,000 $ 520,000

Variable expenses                  214,020     168,000     234,000

as a percentage of sales             58 %          24 %          45 %

Traceable fixed expenses $ 292,000 $ 332,000 $ 207,000

West Division's:

Sales increased to $613,600 ($520,000 * 1.18)

Variable costs increased to $276,120 ($234,000 * 1.18)

Contribution margin increased to $337,480 ($286,000 * 1.18)

Segment income increased by $30,480 ($109,480 - $79,000)

Fixed cost increased to $228,000 ($207,000 + $21,000)

Change in net operating income (loss):

Before      ($97,020)

After        ($66,540)

Decrease $30,480

We hope our answers were helpful. Return anytime for more information and answers to any other questions you may have. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Keep exploring Westonci.ca for more insightful answers to your questions. We're here to help.