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Giant Chef Equipment Company is organized into two divisions-commercial sales and home products. During June, sales for the commercial sales division totaled $1,500,000, and its
Giant Chef Equipment Company is organized into two divisions-commercial sales and home products. During June, sales for the commercial sales division totaled $1,500,000, and its contribution margin ratio averaged 34 percent. Sales generated by the home products division totaled $900,000, and its contribution margin ratio averaged 50 percent. Monthly fixed costs traceable to each division are $180,000. Common fixed costs for the month amount to $120,000. Required: a. Prepare Giant Chef Equipment's responsibility income statement for the current month. Be certain to report responsibility margin for each division and income from operations for the company as a whole. b. Compute the dollar sales volume required for the Home Products Division to earn a monthly responsibility margin of $500,000. c-1. A marketing study indicates that sales in the home products division would increase by 5 percent if advertising expenditures for the division were increased by $15,000 per month. Calculate the Increase or decrease in responsibility margin. c-2. Would you recommend this increase in advertising? Complete this question by entering your answers in the tabs below. Req A Req B Req C1 Req C2 Prepare Giant Chef Equipment's responsibility income statement for the current month. Be certain to report responsibility margin for each division and income from operations for the company as a whole. GIANT CHEF EQUIPMENT COMPANY Responsibility Income Statement For June Entire Company Dollars) Commercial Sales Division Home Products Division Percent Dollars Percent Dollars Percent % % % % % % % % % % % % % ces Req A Req B Req Cl Req C2 Prepare Giant Chef Equipment's responsibility Income statement for the current month. Be certain to report responsibility margin for each division and income from operations for the company as a whole. GIANT CHEF EQUIPMENT COMPANY Responsibility Income Statement For June Entire Company Dollars Commercial Sales Division Home Products Division Percent Dollars Percent Dollars Percent % % % % % % % % % % % % % % % % % Req A Req B Req C1 Req C2 Compute the dollar sales volume required for the Home Products Division to earn a monthly responsibility margin of $500,000. Dollar sales volume < Req A Req C1 > ferences Complete this question by entering your answers in the tabs below. Req A Req B Req C1 Req C2 A marketing study indicates that sales in the home products division would increase by 5 percent if advertising expenditures for the division were increased by $15,000 per month. Calculate the Increase or decrease in responsibility margin. Incremental revenue Increase in contribution margin Increase in responsibility margin
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