A question on accounting , but am in need of an upload
Sports, Inc., Spring Branch Segmented Income Statement For the Year Ended December 31 (Amounts in Thousands) Segment Profitability Decision Sports, Inc., is a nationwide distributor of sporting equipment. The corporate president, Wesley Coldwell, is dissatisfied with corporate operating results, particularly those of the Spring Branch, and has asked the controller for more information. The controller prepared the following segmented income statement (in thousands of dollars) for the Spring Branch: Football Baseball Basketball Spring Line Line Line Branch Sales $3,500 $2,500 $2,059 $8,059 Less variable costs 2,900 2,395 1,800 7,095 Contribution margin $ 600 $ 105 $ 259 $ 964 Less direct fixed costs 300 150 159 609 Segment margin $ 300 ($ 45) $ 100 $ 355 Less common fixed costs 450 Operating income (loss) ($ 95) Coldwell is considering adding a new product line, Kite Surfing. The controller estimates that adding this line to the Spring Branch will increase sales by $300,000, variable costs by $150,000, and direct fixed costs by $20,000. The new product line will have no effect on common fixed costs. ENTER AMOUNTS AS WHOLE NUMBERS IN THOUSANDS AS PER TEXT BOOK I HAVE SOME OF THESE ANSWERS ALREADY INPUTTED!! Chapter 27, P 3. 1. Impact of droppin Baseball line analyzed Sports, Inc., Spring Branch Segment Profitability Decision Incremental Analysis (Amounts in Thousands) Keep Basebal l Drop Basebal l Diff ere nc e in Fa vor of Dr op pin g Ba Sales Less variable costs Contribu tion margin Less direct fixed costs Segment margin Less common fixed costs Operatin g income (loss) $45 450 450 The operatin g loss will be reduced by $45,000. Chapter 27, P 3. continued 2. Impact of adding Kite Surfing line analyzed. Sports, Inc., Spring Branch Projected Segmented Income Statement For the Year Ended December 31 (Amounts in Thousands) 0 $45 Football Baseball Basketball Kite Surfing Sales $3,500 $2,500 $2,059 $300 Spring Branch $8,359 Less variable costs 2,900 2,395 1,800 150 7,245 Contribution margin $600 $105 $259 $150 $1,114 Less direct fixed costs 300 150 159 20 629 Segment margin $300 ($45) $100 $130 $485 Less common fixed costs 450 Operating income (loss) $35 Sports, Inc., Spring Branch Segment Profitability Decision Incremental Analysis (Amounts in Thousands) Without Kite Surfing With Kite Surfing Sales Difference in Favor of Adding Kite Surfing $300 Less variable costs Contribution margin $150 Less direct fixed costs Segment margin $485 $130 Less common fixed costs 450 450 0 Operating income (loss) $35 $130 Operating income will increase by $130,000. Chapter 27, P 3. continued 3. Decreases in sales analyzed Sports, Inc., Spring Branch Projected Segmented Income Statement For the Year Ended December 31 Incremental Analysis (Amounts in Thousands) Sales Footbal l Basketba ll Kite Surfing $300 Spring Branch Less variable costs 150 Contribution margin $150 Less direct fixed costs 20 Segment margin $130 Less common fixed costs 450 Operating income (loss) Sports, Inc., Spring Branch Segment Profitability Decision (Amounts in Thousands) Keep Baseba ll Line Sales Add Kite Surfing Line and Drop Baseball Line Difference in Favor of Adding Kite Surfing and Dropping Baseball Less variable costs Contribution margin Less direct fixed costs Segment margin $102 Less common fixed costs 0 Operating income (loss) $102 Operating income will increase by $102,000. 4. Manager insight: Decision recommended Keep the Baseball line and add the Kite Surfing line because the increase in operating income of $130,000 in Part 2 exceeds the increase in operating income of $102,000 in Part 3
