How will url services be affected, Financial Accounting

Assignment Help:

URL services has two divisions. Basic webpages and custom webpages. Ricky Vega, Custom's manager wants to find out why Custom is not profitable. He has prepared the following reports.

URL Services
Segmented Income Statement
For the year ended December 31

Basic Webpages Custom Webpages Total Company
(1000 units) (200 units)
Basic Revenue $200,000 $150,000 $350,000
Less Variable Costs
Direct professional labor: design $32,000 $80,000 $112,000
Direct professional labor: install 30,000 4,000 34,000
Direct professional labor: maintain 15,000 36,000 51,000
Total Variable Costs $77,000 $120,000 $197,000
Contribution margin $123,000 $30,000 $153,000
Less direct fixed cost
Depreciation on computer equipment $6,000 $12,000 $18,000
Depreciation on servers 10,000 20,000 30,000
Total direct fixed costs $16,000 $32,000 $48,000
Segment margin $107,000 $(2,000) $105,000
Less common fixed costs:
Building rent $24,000
Supplies 1,000
Insurance 3,000
Telephone 1,500
Website rental 500
Total common fixed costs $30,000
Operating income $75,000

URL Services
Custom Webpages Division
Incremental Analysis
Design Install Maintain Total
Service revenue $60,000 $25,000 $65,000 $150,000
LEss cariable costs 80,000 4,000 36,000 120,000
Contribution Margin $(20,000) $21,000 $29,000 $30,000
Less direct fixed costs 6,000 13,000 13,000 32,000
Segment margin $(26,000) $8,000 $16,000 $(2,000)

1. How will URL Services be affected if the Custom Webpages Division is eliminated?
2. How will URL Services be affected if the Design segment of Custom Webpages is eliminated?
3.What should Ricky Vega do? What additional info rmation would be helpful to him in making the decision?

 


Related Discussions:- How will url services be affected

Calculate breakeven in sales units and in sales value, Calculate breakeven ...

Calculate breakeven in sales units and in sales value: Tycoon makes and sells 600 toy cars per month.  Each toy car is sold for RM40 each.  Tycoon is currently producing at 50

What are some examples of co branded foods?, What are some examples of co b...

What are some examples of co branded foods? is cool ranch doritos one?

Efficiency ratios, Efficiency Ratios - These ratios include Receivables T...

Efficiency Ratios - These ratios include Receivables Turnover, Inventory Turnover, Asset Turnover and Net Working Capital Turnover ratios. Efficiency ratios demonstrate the utili

Subsidiary company consolidation, Circumstances under which a subsidiary c...

Circumstances under which a subsidiary company can be excluded from consolidation Consolidated financial statements shall include all subsidiaries of the parent A parent need

Forecast income statements, The forecast income statements are as follows: ...

The forecast income statements are as follows: WORKINGS Sales = 50000 × 1·12 = $56000000 Variable cost of sales = 30000 × 1·12 × 0·85 = $28560000 Fixed cost of sa

Norms for evaluation, You may just be wondering as to see that how we contr...

You may just be wondering as to see that how we control activities by ratios. The answer is not tough to seek. Ratios we have known for control of activities measures relationships

Problem on balance sheet, Problem on balance sheet: At the beginning of ...

Problem on balance sheet: At the beginning of 20X2, Dahl Ltd. acquired 8% of the outstanding common shares of Tippy Ltd. for $400,000. This amounted to 80,000 shares.  At th

Franchise, gershwin coporation obtained afranchise fron sonic hedgeehog inc...

gershwin coporation obtained afranchise fron sonic hedgeehog inc .for a cash payment of $ 120000 on april 1,2010 . the franchise grants gershwin the right to sell certain product a

Perpetual inventory system, In this type of system store balances are recor...

In this type of system store balances are recorded and computed after all receipt and issue. The main focus of this system is to make obtainable details regarding the quantity and

The surplus capital method-partnership, THE SURPLUS CAPITAL METHOD Unde...

THE SURPLUS CAPITAL METHOD Under this method, the initial amounts repaid to partners are in order to reduce their capitals to amounts such that these are now in the same ratio

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd