Question
Conrad Company is evaluating its two divisions, North Division and South Division. Data for the North Division include sales of $530,000, variable costs of $290,000,
Conrad Company is evaluating its two divisions, North Division and South Division. Data for the North Division include sales of $530,000, variable costs of $290,000, and fixed costs of $260,000, 50% of which are traceable to the division. South Divisions data include sales of $610,000, variable costs of $340,000 and fixed costs of $290,000, 60% of which are traceable to the division. Required: a) Prepare a segmented income statement showing the details for the divisions and the company as a whole. Use a format that is useful for decision-making. Proper and full presentation for full marks. (7 marks) b) Should either of the divisions be considered for elimination? Explain well for full marks. (1 mark) c) The companys sales manager believes that sales volume in theNorth Division could be increased by 15% if advertising was increased by $25,000. Would you recommend the increased advertising? Show calculations. (3 marks)
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