Accounting Help
Bovine Company, a wholesale distributor of DVDs, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement below: Sales Variable expenses $ 1,589,000 697,580 Contribution margin Fixed expenses 891,420 981,000 Net operating loss $ (89,580) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following data: Sales Variabl e expense s as a percenta ge of sales Tracea ble fixed expense s South Central $ 379,000 52% $ 265,000 Geographic Market North $ 660,000 $ 550,000 35% 49% $ 334,000 $ 201,000 Prepare a contribution format income statement segmented by geographic market, as desired by the president. (Input all amounts as positive values except losses which should be indicated by a minus sign.) Geographic Market Total Company South $ Central North $ $ $ $ $ $ $ 2a. The company's sales manager believes that sales in the Central geographic market could be increased by 20% if monthly advertising were increased by $22,000. Calculate the incremental net operating income. Incremental net operating income $ 2b. Would you recommend the increased advertising? No Yes Marple Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two officesone in Houston and one in Dallas. The firm classifies the direct costs of consulting jobs as variable costs. A segmented contribution format income statement for the company's most recent year is given below: Office Total Housto Compa n ny 937,50 Sales $ 100.0% 0 Variab le 506,25 54.0 expens 0 es Contri bution margin Trace able fixed expens es Office segme nt margin Com mon fixed expens es not trace able to 431,25 0 23.6 150,00 0 16.0 187,50 0 56,250 22.4 221,25 0 $ 46.0 210,00 0 Dallas 131,25 0 97,500 $ 33,750 750,00 0 100% 30 450,00 0 60 70 300,00 0 40 52 112,50 0 15 187,50 0 25% 100% 18% $ $ offices Net operati ng income $ 71,250 7.6% By how much would the company's net operating income increase if Dallas increased its sales by $93,750 per year? Assume no change in cost behavior patterns. Increase in Net operating income $ : 03_13_2013_QC_2711 Refer to the original data. Assume that sales in Houston increase by $62,500 next year and that sales in Dallas remain unchanged. Assume no change in fixed costs. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place. Input all amounts as positive values except losses which should be indicated by a minus sign.) Total Company Segments Dallas Houston % A m o u nt $ % Amount % $ $ $
