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Answer
1 contribution margin income statement
|
Total company |
East | Central | West | |
| Sales | 1,642,000 | 422,000 | 700,000 | 520,000 |
| Less variable cost | 589,400 | 253,200 | 175,000 | 161,200 |
| Contribution margin | 1,052,600 | 168,800 | 525,000 | 358,800 |
| Traceable fixed cost | 816,000 | 290,000 | 330,000 | 196,000 |
| Operating profit after traceable fixed cost | 236,600 | (121,200) | 195,000 | 162,800 |
| Un traceable fixed cost | 342,000 | |||
| Operating profit | (105,400) |
Working note:
Variable cost of East division = 422,000 × 60% = $253,200
Variable cost of Central division
= 700,000 × 25% = $175,000
Variable cost of West division
= 520,000 × 31% = $161,200
Un traceable fixed cost = 1,158,000 - 816,000 = $342,000
2 17% increase in sales by increasing advertisement expenses by $21,000.
Increase in sales = 520,000 + 17% = $608,400
Variable cost = 608,400 × 31% = $188,604
Traceable fixed cost = 196,000 + 21,000 = $217,000
Income statement of West division as per changes
| Particulars | $ |
| Sales | 608,400 |
| Less variable cost | 188,604 |
| Contribution margin | 419,796 |
| Traceable Fixed cost | 217,000 |
| Operating profit | 202,796 |
Operating income after change is $202,796.
Operating income before change is $162,800.
Change in operating income
= 202,796 - 162,800 = $39,996
Net incremental operating income is $39,996.
These changes improve the operating income from $162,800 to $202,796.
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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, which
follows:
Sales
$
1,632,000
Variable
expenses
640,880
Contribution
margin
991,120
Fixed expenses
1,090,000
Net operating income
(loss)
$
(98,880)
In an effort to isolate the problem, the president has asked for
an income statement segmented by division. Accordingly, the
Accounting Department has developed the following information:
...
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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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, which
follows:
Sales
$
1,632,000
Variable
expenses
640,880
Contribution
margin
991,120
Fixed expenses
1,090,000
Net operating income
(loss)
$
(98,880)
In an effort to isolate the problem, the president has asked for
an income statement segmented by division. Accordingly, the
Accounting Department has developed the following information:
...
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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, which follows: $ Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) 1,724,000 596,420 1,127,580 1,240,000 (112,420) $ In an effort to isolate the problem, the president has asked for an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Sales Variable expenses as a percentage of...
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, which follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,639,000 618,920 1,020.080 1,122,000 $ (101,920) In an effort isolate the problem, the president has asked for an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Sales Variable expenses as a percentage of sales...
10 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, which follows: Sales s 1.600.000 Variable expenses 569,100 Contribution margin Fixed expenses 1,134,000 Net operating income (loss) S (103,100) In an effort to isolate the problem, the president has asked for an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Division East Central West Sales $ 380,000...
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