Reference no: EM131442468
Assignment
Segment Reporting and Decision-Making [LO6-4]
Vulcan Company's contribution format income statement for June is given below:
Vulcan Company
Income Statement
For the Month Ended June 30
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $750,000
Variable expenses . . . . . . . . . . . . . . . . . . . . . . . 336,000
Contribution margin . . . . . . . . . . . . . . . . . . . . . . 414,000
Fixed expenses . . . . . . . . . . . . . . . . . . . . . . . . . 378,000
Net operating income . . . . . . . . . . . . . . . . . . . . $ 36,000
Management is disappointed with the company's performance and is wondering what can be done to improve profits. By examining sales and cost records, you have determined the following:
a. The company is divided into two sales territories-Northern and Southern. The Northern ter-ritory recorded $300,000 in sales and $156,000 in variable expenses during June; the remain-ing sales 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
b. The company is the exclusive distributor for two products-Paks and Tibs. Sales of Paks and Tibs totaled $50,000 and $250,000, respectively, in the Northern territory during June. Vari-able expenses are 22% of the selling price for Paks and 58% for Tibs. Cost records show that $30,000 of the Northern territory's fixed expenses are traceable to Paks and $40,000 to Tibs, with the remainder common to the two products.
Required:
1. Prepare contribution format segmented income statements first showing the total company broken down between sales territories and then showing the Northern territory broken down by product line. In addition, for the company as a whole and for each segment, show each item on the segmented income statements as a percent of sales.
2. Look at the statement you have prepared showing the total company segmented by sales terri-tory. What insights revealed by this statement should be brought to the attention of management?
3. Look at the statement you have prepared showing the Northern territory segmented by product lines. What insights revealed by this statement should be brought to the attention of management?
|
Do you have a good relationship with your mother
: This chapter reinforced some of the important elements of open ended questions, that we talked about in the previous weeks. So, what I want you to do today is to use open questions in the real world. When you have a conversation with your signifi..
|
|
Compute the break-even point
: a. Compute the break-even point. b. Ms. Eaton comes up with a new plan to cut fixed costs to $200,000. However, more labor will now be required, which will increase variable costs per unit to $39. The sales price will remain at $66. What is the n..
|
|
Minimum stated interest rate
: Acme's CD's are compounded on a monthly basis. What is the minimum stated interest rate you should ask for from Acme in order to make you indifferent to switching?
|
|
Discuss the political economy of such legislation
: Many cities have passed rent control legislation. Discuss carefully who benefits and loses from such legislation, in the short run and in the long run. Discuss the political economy of such legislation.
|
|
Prepare contribution format segmented income statements
: Prepare contribution format segmented income statements first showing the total company broken down between sales territories and then showing the Northern territory broken down by product line.
|
|
The perception of the firms credit rating
: Now that the board members of Felicia & Fred are planning to implement a new crystal jewelry product line, they are concerned about potential shareholder sentiment regarding the dilution of ownership interest. What is the likely effect on the weighte..
|
|
What is the company balance sheet amount
: The Arizona Bay Corp sells on credit terms of net 30. Its accounts are, on average, four days past due. If annual credit sales are $9.75 million what is the company's balance sheet amount in accounts receivable?
|
|
Worlds most admired companies and respected companies
: Every year, Fortune magazine publishes a list of the "World's Most Admired Companies" and Barron’s magazine publishes a list of the “World's Most Respected Companies." Choose one company from the top twenty on either of these lists from the most rece..
|
|
Who are the main beneficiaries of tax-exempt bonds
: Who are the main beneficiaries of tax-exempt industrial development bonds (which enable communities to borrow funds to re-lend to firms constructing new plants within the city).
|