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- Cullumber Toys' management is considering eliminating product A, which has been showing a loss for several years. The company's annual income statement, is as follows: Sales Variable expenses Contribution margin Advertising expense Depreciation expense Corporate expenses Total fixed expenses Operating income (a) enses margin Direct fixed expenses rgin C $2,247.000 $1,404,000 $1,809,300 $5,460,300 1,632,000 600,400 1,095,200 3,327,600 $615,000 $803,600 $714,100 $2,132,700 $517.000 $430,000 $520,000 $1,467,000 15,900 46,500 93,900 105,000 280,500 $626,800 $645,600 $1,794,000 $(11,800) $68,500 $338,700 A Advertising expense - Specific to each product. Depreciation expense - Specific to each product; no other use available, no resale value. Corporate expenses - Allocated based on number of employees. Restate the income statement in segment margin format. Common fixed expenses 1: ofit B $ 10,000 $ 81,600 $521,600 $282,000 20,600 A Total $ BA segment of a company reports the following loss for the year. All $178,500 of its variable costs are avoidable, and $110,000 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 255,000 178,500 76,500 115,000 (38,500) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Complete this question by entering your answers in the tabs below. Required A Required B Compute the income increase or decrease from eliminating this segment. Segment Elimination Analysis Income Increase (Decrease) Sales Variable costs Contribution margin Fixed costs Income (loss) Continue Eliminate $ 255,000 178,500 76,500 115,000 $ (38,500)Management and accounting Spencer Company is considering closing one of its product lines. Current data on the product line is as follows:DescriptionSales revenue $20,000Variable costs$17,000Direct avoidable fxed costs $7,000Indirect allocated fxed costs $5,000Net Income Loss on the product line ($9,000) *The direct avoidable fxed costs will be eliminated if the product line is closed. **The indirect allocated fxed costs will remain the same whether the product line is continued or closed.In addition, if Spencer closes the product line, Spencer can sublease its production facility to another company and earn subleaserevenue of $2,700 per year. Assume that Spencer decides to discontinue this product line. By how much will overall company net income change? Company net income will INCREASE by $9000Company net income will DECREASE by $9000Company net income will DECREASE by $6700Company net income will INCREASE by $6700
- A segment of a company reports the following loss for the year. All $192,500 of its variable costs are avoidable, and $93,000 of its fixed costs are avoidable. Segment Income (Loss) Sales $ 275,000 Variable costs 192,500 Contribution margin 82,500 Fixed costs 101,000 Income (loss) (18,500) (a) Compute the income increase or decrease from eliminating this segment.(b) Should the segment be eliminated?Mission Company has three product lines: D, E, and F. The following information is available: D E F Sales revenue 83,000 42,000 24,000 Variable expenses 40,000 26,000 15,000 43,000 16,000 9,000 Fixed expenses 12,000 15,000 17,000 Operating income 31,000 1,000 $(8,000) Mission company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed expenses are unavoidable. Assuming Mission Company discontinues product line F and does not replace it, what affect will this have an operating income?mars The manager of Q Corporation is recommending the closure of Branch B in order to eliminate its net loss of P33,750. The income statement shows: Home Branch Branch Office B Sales P800,000 P300,000 P500,000 P400,000 P120,000 P250,000 30,000 20,000 56,250 Cost of sales Operating expenses directly related to sales Operating expenses indirectly related to sales General & administrative expenses allocated Total costs & expenses 80,000 80,000 90,000 110,000 93,750 P720,000 P226,250 P533,750 P73,750 P(33,750) 150,000 P80,000 Operating income If Branch B is closed, one personnel (with salary of P30,000) have to be transferred to the home office. Branch B has furniture costing P120,000 and with an estimated useful life of 5 years has to be transferred also to the home office. REQUIRED: 1. Do you agree with the manager? Explain.
- The Alligator segment of Wildhorse Specialty Meats is operating at a loss and has the following data: Sales Variable expenses Fixed expenses $7320007 512400 366000 If the Alligator segment is eliminated, what will be the effect on the remaining company? Assume that 50% of the fixed expenses will be eliminated and the rest will be allocated to the segments of the remaining company. O $439200 increase. O $36600 decrease. O $36600 increase. O $183000 increase.The income statement of product Hammer, one of the several product being sold Tony Companyshows a sales revenue of P184,000 and a total cost and expenses amounting to P211,600. Fixedcosts amounted to P86,480, P49,680 of which are unavoidable regardless of whether the product willbe dropped or not. a. What is the product elimination point (shutdown) point (round to nearest hundred thousand)? b. If in the next year, it is estimated that the revenue from Product Hammer would only be P100,000,should the company continue or drop the product line?Wingate Company, a wholesale distributor of electronic equipment, 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 Net operating income (loss) 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: Sales Variable expenses as a percentage of sales Traceable fixed expenses $ 1,546,000 670, 180 875,820 963,000 $ (87,180) Req 1 Req 2A East $ 386,000 58% $ 251,000 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 $26,000 based on the belief that it would increase that division's sales by 14%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease)…
- Suppose Grainy Day is considering discontinuing its tasty loops product line. Assume that during the past year, the tasty loops' product line income statement showed the following: A B 1 Sales revenue $7,550,000 2 Less: Cost of goods sold 6,400,000 3 Gross profit 1,150,000 4 Less: Operating expenses 1,650,000 5 Operating income (loss) $(500,000) Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the tasty loops line is just one of the company's cereal operations, only $780,000 of direct fixed costs (the majority of which is advertising) will be eliminated if the product line is discontinued. The remainder of the fixed costs will still be incurred by the company. If the company decides to discontinue the product line, what will happen to the company's operating income? Should Grainy Day discontinue the tasty loops product line?Wingate Company, a wholesale distributor of electronic equipment, 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 Net operating income (loss) 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: Sales Variable expenses as a percentage of sales Traceable fixed expenses $ 1,567,000 576,590 990,410 1,089,000 $ (98,590) Req 1 Req 2A East $ 397,000 47% $ 299,000 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 $22,000 based on the belief that it would increase that division's sales by 16%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease)…Wingate Company, a wholesale distributor of electronic equipment, 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 Net operating income (loss) 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: Sales Variable expenses as a percentage of sales Traceable fixed expenses $ 1,461,000 602,830 858,170 944,000 $ (85,830) Req 1 Complete this question by entering your answers in the tabs below. Req 2A East $ 351,000 $ 275,000 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 $29,000 based on the belief that it would increase that division's sales by 15%. Assuming these estimates are accurate, how much…