Question
Answer all these questions with the right answer letter next to each question number 49-Valley Inc. has three divisions, Almond, Grover and Oak. Following is
Answer all these questions with the right answer letter next to each question number
49-Valley Inc. has three divisions, Almond, Grover and Oak. Following is the income statement for the previous year:
Almond | Grover | Oak | Total | |||||||||
Sales | $ | 487,000 | $ | 271,500 | $ | 226,000 | $ | 984,500 | ||||
Variable Costs | 183,000 | 124,700 | 100,300 | 408,000 | ||||||||
Contribution Margin | 304,000 | 146,800 | 125,700 | 576,500 | ||||||||
Fixed Costs | 257,000 | 156,250 | 103,750 | 517,000 | ||||||||
Profit Margin | $ | 47,000 | $ | (9,450 | ) | $ | 21,950 | $ | 59,500 | |||
Of the fixed costs, $309,000 is for corporate costs and is allocated equally to the three divisions. a. How much does Grover Division have in direct fixed costs?
b. What is Grover Divisions segment margin?
c. What would Valleys profit margin be if Grover Division were dropped?
50-Center Company currently produces three products from a joint process. The joint process has total costs of $504,000 per month. All three products, A, B & C, are immediately saleable as they come out of the joint process. Alternatively, any of the products could continue on with additional processing and be sold as a more complete product. The following information is available:
Units | Immediate Sales Price | Later Sales Price | Unit Cost of Further Processing | |||||||||||
A | 4,250 | $ | 17 | $ | 18 | $ | 2.00 | |||||||
B | 17,750 | $ | 21 | $ | 24 | $ | 2.50 | |||||||
C | 10,250 | $ | 26 | $ | 30 | $ | 3.00 | |||||||
a-1. Should Product A be sold immediately or sold after processing further?
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Sell Now
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Sell Later
a-2. How much will the decision affect profit?
b-1. Should Product B be sold immediately or sold after processing further?
-
Sell Now
-
Sell Later
b-2. How much will the decision affect profit?
c-1. Should Product C be sold immediately or sold after processing further?
-
Sell Now
-
Sell Later
c-2. How much will the decision affect profit?
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