Question

Requirement 4. You have been asked to determine operating income (loss) for each product line. (Round the distribution cost per kilogram to the nearest cent and all other amounts to the nearest dollar.) Scooter Total Parts Sales $ 1.737,000 Cost of goods sold: Direct material $ 440.000 87,500 527,500 $ 1,209,500 Indirect production Total cost of goods sold Gross profit Selling and administrative expenses: Commissions Distribution to warehouses Total selling and administrative expenses Contribution to corporate expenses and profit Corporate expenses (unallocated): Corporate salaries Other general expenses 78.400 70,000 148,400 1,061,100 12,000 16,000 Total unallocated expenses 28,000 Operating income $ 1,033, 100 Enter any number in the edit fields and then click Check Answer.

Answer 1

Working
Particulars	Scooter Parts	Lawn Mower Parts	Hand Tools Parts	Total
Machine Hours	9,050	1,750	1,700	12,500
Share of M/C Hrs	72.40%	14.00%	13.60%
Weight of parts shipped to distributors-Kg	40,000	470,000	190,000	700,000
Share of Weights	5.71%	67.14%	27.14%
Sales Commission per unit	$                    4.20	$                0.80	$                 0.15
Units assembled and sold	13,000	20,000	52,000	85,000
Sales Price per unit	$                 85.00	$              16.00	$                 6.00

Boston Tools

Statement of Operating Income

Particulars	Scooter Parts	Lawn Mower Parts	Hand Tools Parts	Total
Sales Revenue	1,105,000	320,000	312,000	1,737,000
Cost of Goods Sold
Direct Materials	165,000	115,000	160,000	440,000
Indirect Production (allocated based on m/c hrs)	63,350	12,250	11,900	87,500
Total Cost of Goods Sold	228,350	127,250	171,900	527,500
Gross Profit	876,650	192,750	140,100	1,209,500
Selling & Administrative Expenses
Commissions	54,600	16,000	7,800	78,400
Distribution to warehouses(allocated based on wt in Kg)	4,000	47,000	19,000	70,000
Income before unallocated Expenses	818,050	129,750	113,300	1,061,100
Operating Income/(Loss) % by Product line before unallocated Expenses	74.03%	40.55%	36.31%	61.09%
Unallocated Expenses
Corporate Salaries				12,000
Other General expenses				16,000
Total Unallocated Expenses				28,000
Net Operating Income /(Loss) at overall Level:				1,033,100
Net Operating Income /(Loss) % at overall Level:				59.48%