Question

Division Central East West Total Company $ 1,535,000 648,000 0 0 0 Sales Variable expenses Contribution margin Traceable fixed expenses Divisional segment margin Common fixed expenses not traceable to divisions Net operating loss 887,000 788,000 99,000 $ 10,500 88,500 0 $ 0 $ 0 $ $

Answer 1

Answers

• [1]

	Total	East	Central	West
Sales	$1,535,000	$365,000	$620,000	$550,000
Variable expenses	$648,500	$160,600	$229,400	$258,500
Contribution margin	$886,500	$204,400	$390,600	$291,500
Traceable Fixed expenses	$788,000	$265,000	$321,000	$202,000
Segment/Division margin	$98,500	($60,600)	$69,600	$89,500
Common Fixed expenses	$187,000
Net Operating Income (Loss)	($88,500)

• Working for [2]

	Total	East	Central	West
Sales	$1,617,500	$365,000	$620,000	$632,500
Variable expenses	$687,275	$160,600	$229,400	$297,275
Contribution margin	$930,225	$204,400	$390,600	$335,225
Traceable Fixed expenses	$812,000	$265,000	$321,000	$226,000
Segment/Division margin	$118,225	($60,600)	$69,600	$109,225
Common Fixed expenses	$187,000
Net Operating Income (Loss)	($68,775)

• [2a]

A	Net Loss before	$88,500
B	Net Loss now	$68,775
C = A - B	Net Income increased by	$19,725 [Answer]

• [2b]

YES, advertising is recommended, because Net Income is increasing.