answered by Asmalhotra - ONLY

1. (TCO D) Seebach Corporation has two major business segmentsApparel and Accessories. Data concerning those segments for June appear below. Sales revenues, Apparel $700,000 Variable expenses, Apparel $406,000 Traceable fixed expenses, Apparel $98,000 Sales revenues, Accessories $710,000 Variable expenses, Accessories $312,000 Traceable fixed expenses, Accessories $107,000 Common fixed expenses totaled $292,000 and were allocated as follows: $155,000 to the Apparel business segment and $137,000 to the Accessories business segment. Required: Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only dollar amounts. 2. (TCO D) Wryski Corporation had net operating income of $150,000 and average operating assets of $500,000. The company requires a return on investment of 19%. Required: i. Calculate the company's current return on investment and residual income. ii. The company is investigating an investment of $400,000 in a project that will generate annual net operating income of $78,000. What is the ROI of the project? What is the residual income of the project? Should the company invest in this project? 3. (TCOD) The management of Thews Corporation is considering dropping product E28I. Data from the company's accounting system appear below. Sales $480,000 Variable Expenses $202,000 Fixed Manufacturing Expenses $158,000 Fixed Selling and Administrative Expenses $130,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $86,000 of the fixed manufacturing expenses and $67,000 of the fixed selling and administrative expenses are avoidable if product E28I is discontinued. Required: i. What is the net operating income earned by product E28I according to the company's accounting system? Show your work! ii. What would be the effect on the company's overall net operating income of dropping product E28I? Should the product be dropped? Show your work! 4. (TCO D) Part F77 is used in one of Wilcutt Corporation's products. The company's Accounting Department reports the following costs of producing the 7,000 units of the part that are needed every year. Direct Materials Direct Labor Variable Overhead Supervisor's Salary Depreciation of Special Equipment Allocated General Overhead Per Unit $7.00 $6.00 $5.60 $4.70 $1.50 $5.40 An outside supplier has offered to make the part and sell it to the company for $28.30 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $9,000 of these allocated general overhead costs would be avoided. Required: i. Prepare a report that shows the effect on the company's total net operating income of buying part F77 from the supplier rather than continuing to make it inside the company. ii. Which alternative should the company choose? 5. (TCO D) Biello Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 14,250 medals. The company normally charges $115 per medal. Cost data for the current level of production are shown below. Variable Costs Direct Materials Direct Labor Selling and Administrative Fixed Costs Manufacturing Selling and Administrative $969,000 $270,750 $270,075 $370,550 $89,775 The company has just received a special one-time order for 600 medals at $102 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Required: Should the company accept this special order? Why? TCO D) Return on investment (ROI) is equal to the margin multiplied by (Points : 5) sales. turnover. average operating assets. residual income. 2. (TCO D) Given the following data, what would ROI be? Sales $50,000 Net operating income $5,000 Contribution margin $20,000 Average operating assets $25,000 Stockholder's equity $15,000 (Points : 5) 10% 20% 16.7% 80% 3. (TCO D) For which of the following decisions are sunk costs relevant? (Points : 5) The decision to keep an old machine or buy a new one The decision to sell a product at the split-off point or after further processing The decision to accept or reject a special order offer All of the above None of the above