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Bulacan Manufacturing Corporation produces two (2) different product lines & has a manager incharge for each line. The manager of product T has complained about
Bulacan Manufacturing Corporation produces two (2) different product lines & has a manager incharge for each line. The manager of product T has complained about the company's accounting system. He stated that he feels very strongly that his produt line had a better year than the preceding year. However, the Company's income statement for his product line showed a less of P 45,000 for 2009 as follows: Sales Less: Cost of sales Products 2,700,000 2,370,000 Product T 2,400,000 2,220,000 Total 5,100,000 4,590,000 Gross profit Less: operating expenses 330,000 186,000 180,000 225,000 510,000 411,000 Net income (loss) 144,000 (45,000) 99,000 You have been requested to analyze the income statement of the two product lines to determine whether the complaint of the manager of Product T is justified. In your analysis, you find that the over-all contirbution margin for Product S & Tare 30% & 40% respectively. You also discover that variable expenses generally tend to be controllable by the managers, and that non-controllable fixed expenses for products & Tare P 600,000 & P 570,000 respectively Required: 1 Income statement for the two (2) product lines based on responsibility accounting 2 A written explanation supporting or refuting the product line manager's complaint
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