Answered

At Westonci.ca, we make it easy to get the answers you need from a community of informed and experienced contributors. Get immediate answers to your questions from a wide network of experienced professionals on our Q&A platform. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform.

Bovine 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 $200,000
Required: 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 computations to support your answer.

Sagot :

Solution :

Particulars                   [tex]\text{Total company}[/tex]          [tex]\text{South }[/tex]           [tex]\text{Central}[/tex]          [tex]\text{North}[/tex]

Sales                           $[tex]1,500,000[/tex]              $[tex]400,000[/tex]      $[tex]600,000[/tex]     $[tex]500,000[/tex]

Variable expenses        588,000                208000       180000     200000

Contribution margin      912000                  192000        420000    300000

Traceable fixed          770,000                    240,000      330,000    200,000

expenses          

Geographic market      142,000          -$48000              $90000       $100000

segment expenses

Common fixed

expenses not traceable

to geographic markets

Net operating income

We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.