Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Check my Severo SA of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement fin terms of the Brazilian

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Check my Severo SA of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement fin terms of the Brazilian currency, the real, R) for last month is given below Division Sales Variable expenses Total Company R4,075,000 2,213,000 Cloth R2,750,000 1,140,000 Leather 21.925,000 1,073,000 Contribution martin 2,462.000 1,610,000 852.000 ce Traceable fixed expenses Advertising Selling and administrative Depreciation 810,000 625,000 265,000 480,000 390,000 133,000 330,000 235,000 1)2,000 Total traceable Fixed expenses 1,700,000 1,603,000 697,000 Divisional segment margin 76,000 R 607,000 R 155,000 Common fixed expenses 108.600 Operating income R 350,000 Help Save & Exit Subm Check my work Top management can't understand why the Leather Division has such a low segment margin when its sales are only 30% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division Leather Division Product Lines Barnent 1650,000 Shoes 1820,000 Handbags 425,000 Sales Traceable fixed expenses Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales R66.000 2.48.000 R 37,000 65% IL 65,000 53,000 294,000 sex 179.000 R40,000 R 21,000 52% ces Analysis shows that R94,000 of the Leather Division's selling and administrative expenses are common to the product lines Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines. Product Line Leather Division Garments Shoes Handbags R R RI RI PISY 1 of 3 Next > 1 Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines Product Line Leather Division ints Garments Shoes Handbags R R R eBook Print Traceable fixed expenses eferences Total traceable fixed expenses R R R Common fixed expenses R Che Che 2. Management is surprised by the handbag product line's poor showing and would like to have the product line segmented by market. The following information is available about the markets in which the handbag line is sold. Handbag Markets Domestic R340,000 Foren R35,000 Sales Traceable fixed expenses: Advertising Variable expenses as a percentage of sales R 30,000 45% R149,000 sex All of the handbag product line's selling and administrative expenses and depreciation are common to the markets in which the product is sold. Prepare a contribution format segmented income statement for the handbag product line with segments defined as markets Sales Market Handbags Domestic Foreign R R R Traceable fixed expenses Check Salos Market Handbags Domestic Foreign R R Traceable fixed expenses R R Common fixed expenses Total common fixed expenses 3. Refer to the statement prepared in (1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A marketing study indicates that such a campaign would increase sales of the Garments product line by R218,000 or sales of the shoes product line by R163,000. The campaign would cost R33,000. Check my w Severo SA of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement on terms of the Brazilian currency, the real, R) for last month is given below DIVES Sales Variable expenses Total Company R 4,675,000 2,213,000 Cloth Leather R2,750,000 R1,925,000 1,140,000 1,073,000 2,462.000 1,610,000 852,00 Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation 810, 625, ce 265,000 450,000 390,000 133,000 330,00 235,000 132,000 Total traceable fixed expenses 1,700,000 1,000,000 697,000 762,000 R Divisional seguent margin 607.000 155,000 Common fixed expenses 400,000 R 354,000 Operating income ather Divisinn has such a Inw conment marin when it calcare nu nece than Top management can't understand why the Leather Division has such a low segment margin when its sales are only 30% less than sales in the Cloth Division As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division Leather Division Product Wines oped arments R600,000 Shoes Sales HA 20,00 H425,000 Traceable fixed expenses Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales R66.00 R 40.000 R 37,000 Book R 15,000 R 53,000 74.000 Se 179,000 R 40.000 R 21,000 52% ences Analysis shows that R94,000 of the Leather Division's selling and administrative expenses are common to the product lines Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines Product Line Leather Division Garments Shoes Handbags R Check my Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines Product Line Leather Division Garments Shoes llandbags R R R R 0 0 0 Traceable fixed expenses 0 0 0 0 Total traceable fixed expenses OR OR OR 0 Common fixed expenses R 0 2. Management is surprised by the handbag product line's poor showing and would like to have the product line segmented by market. The following information is available about the markets in which the handbag line is sold ant Domestic 340,00 Foren R8,000 swed Sales Traceable fixed expenses Advertising Variable expenses a percentage of sales 30,000 R149.00 SON co Print All of the handbag product lines selling and administrative expenses and depreciation are common to the markets in which the product is sold. Prepare a contribution format segmented income statement for the handbag product line with segments defined as Ferences markets Sales Market Domestic Handbags Foreign R R 0 0 Traceable fixed expenses All of the handbag product line's selling and administrative expenses and depreciation are common to the markets in which the product is sold. Prepare a contribution format segmented income statement for the handbag product line with segments defined as markets Sales Market nd Handbags Domestic R R R 0 Traceable fixed expenses OR OR 0 Common foced expenses Total common faced expenses 0 R 0 3. Refer to the statement prepared in (1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A marketing study indicates that such a campaign would increase sales of the Garments product line by R218,000 or sales of the shoes product line by R163,000. The campaign would cost R33.000 a. Compute the increased operating income for these product lines for the expected increased sales Gamments Shoes Increased operating income b. Based on the above results, which product line should be chosen? Garments Shoes

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

EBay Sales Tracker Quick And Easy Bookkeeping System

Authors: Queen Thrift

1st Edition

B08KJ5FJND, 979-8692592774

More Books

Students also viewed these Accounting questions

Question

How were the HR functions affected by Hurricane Rita?

Answered: 1 week ago

Question

What information might lead you to choose working for the company?

Answered: 1 week ago

Question

Which environment factor(s) did Hurricane Rita affect? Discuss.

Answered: 1 week ago