Exercise 7-4 (Algo) Basic Segmented Income Statement (L07-4] Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit $ 10.00 $ 34.00 Variable expenses per unit $ 2.20 $ 10.00 Traceable fixed expenses per year $ 138,000 $ 40,000 Last year the company produced and sold 40,500 units of Weedban and 16,500 units of Greengrow. Its annual common fixed expenses are $95,000 Required: Prepare a contribution format income statement segmented by product lines Product Line Total Company Weedban Greengrow ded Homework Saved Help Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices--one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Sales Variable expenses contribution margin Teaceable fixed expenses office segment margin Connon fixed expenses not traceable to offices Net operating income Total Company $ 490,500 1000 245,250 500 245,250 500 137, J40284 107,910 220 68.670 141 $ 39,240 Ofice Chicago Minneapolis $ 163,500 1001 $ 327,000 1001 49,050 300 196.200 601 114,450 700 130,800 400 85,020 524 52,320 160 $ 29,430 184 $ 78,480 200 Exercise 7-17 (Algo) Working with a Segmented Income Statement (L07.4) Assume that Minneapolis' sales by major market are: Market Minneapolis Sales Medical Dental $ 327,000 1003 Variable expenses $ 218,000 1000 $ 109,000 1000 196,200 601 Contribution margin 139.520 56.680 520 130.000 408 Traceable fixed expenses 178,480 360 52,320 400 33.970 12.000 65 22,890 218 office segment margin 94.830 290 65.400 30 $ 29,430 271 Common fixed expenses not traceable to offices 16.250 50 Not operating income 5.78.430 24 The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,450 Marketing studies indicate that such a campaign would increase sales in the Medical market by $43,600 or increase sales in the Dental market by 538,150 Required information 600 648 1008 523 488 115 Sales $ 327,000 100+ $ 218,000 1008 $ 109,000 Variable expenses 196, 200 139,520 56,680 Contribution margin 130,800 40% 78,480 365 Traceable fixed expenses 52,320 35,970 13,080 6 22,890 211 office segment margin 94,830 298 $ 65,400 300 $ 29, 430 270 Common fixed expenses not traceable to offices 16,350 58 Net operating income $ 78,480 24 The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,450. Marketing studies indicate that such a campaign would increase sales in the Medical market by $43,600 or increase sales in the Dental market by $38,150, Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? Company's profits required Required 2 > by Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Net operating income 13,080 $ 65,400 68 308 22,890 $ 29, 430 21 278 35,970 118 94,830 298 16,350 5. $ 78,480 24 The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,450. Marketing studies indicate that such a campaign would increase sales in the Medical market by $43,60 or increase sales in the Dental market by $38,150. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required: Requirda 2 Required 3 How much would the company's profits increase (decrease) ir it implemented the advertising campaign in the Dental Market? Company's profits by Required information 1008 648 363 61 308 1000 52: 488 218 278 Sales $ 327,000 1008 $ 218,000 $ 109,000 Variable expenses 196, 200 608 139,520 56,680 Contribution margin 130,800 408 78,480 52,320 Traceable fixed expenses 35,970 111 13,080 22,890 Office segment margin 94,830 298 $ 65,400 $ 29,430 Common fixed expenses not traceable to offices 16,350 53 Net operating income $ 78,480 24 The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,450. Marketing studies Indicate that such a campaign would increase sales in the Medical market by $43,600 or increase sales in the Dental market by $38,150. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required: Required 2 Required) In which of the markets would you recommend that the company focul its advertising campaign? Medical Dental