Help Building Your Skills Analytical Thinking (L07-4) Diversified Products, Inc., has recently acquired a small publishing company that offers three books for sale-a cookbook, a travel guide, and a handy speller. Each book sells for $10. The publishing company's most recent monthly Income statement is shown below. Product Line Total Travel Handy Company Cookbook Guide Speller . Salon $100,000 $90,000 $ 150,000 $60,000 Tixpensen Printing conto 102,000 27,000 63,000 12,000 advertising 36,000 13.500 19,500 3,000 General salen 18,000 5,400 9,000 3,600 salaries 33,000 18,000 9,000 6.000 Equipment depreciation 9,000 3,000 3,000 3,000 Salon commissions 30.000 9.000 15,000 6.000 General administration 42,000 14,000 14,000 14,000 Warehouse rent 12,000 3,600 6,000 2.400 Depreciation office tacilities 3.000 1,000 1,000 1.000 Total expenses 285,000 94,500 51,000 Het operating income (love) 15,000 (4.500) $ 10,500 $9,000 The following additional information is available: a. Only printing costs and sales commissions are variable; all other costs are fixed. The printing costs (which include materials, labor and variable overhead) are traceable to the three product lines as shown in the income statement above. Sales commissions are 10% of sales. b. The same equipment is used to produce all three books, so the equipment depreciation expense has been allocated equally among the three product lines. An analysis of the company's activities indicates that the equipment is used 30% of the time to produce cookbooks, 50% of the time to produce travel guides, and 20% of the time to produce handy spellers c. The warehouse is used to store finished units of product so the rental cost has been allocated to the product lines on the basis of sales dollars. The warehouse rental cost is $3 per square foot per year. The warehouse contains 48,000 square feet of space of which 7,200 80 square feet is used by the cookbook line 24,000 square feet by the travel guideline, and 16,800 square feet by the Help Product Line Total Travel Handy Company Cookbook Guide speller Sales $ 300.000 $90,000 $ 150,000 $60,000 Expenses : Drinting costs 102,000 27,000 63,000 Advertising 12,000 36.000 13,500 19,500 3,000 General sales 18,000 5,400 9,000 3,600 Salaries 33,000 18.000 9.000 6.000 Equipment depreciation 9,000 3,000 3,000 3,000 Sales commissions 30.000 9,000 15,000 6.000 General administration 42,000 14,000 14,000 24,000 Warehouse rent 12.000 3,600 6,000 2.400 Depreciation office facilities 3.000 1,000 1,000 1,000 Total expenses 285,000 94,500 139,500 51,000 Net operating income (los) $ 15,000 $4,500) $10.500 $ 9.000 The following additional information is available: a. Only printing costs and sales commissions are variable, all other costs are fixed. The printing costs (which include materials, labor and variable overhead) are traceable to the three product lines as shown in the income statement above Sales commissions are 10% of sales b. The same equipment is used to produce all three books, so the equipment depreciation expense has been allocated equally among the three product lines. An analysis of the company's activities indicates that the equipment is used 30% of the time to produce cookbooks, 50% of the time to produce travel guides, and 20% of the time to produce handy spellers, c. The warehouse is used to store finished units of product, so the rental cost has been allocated to the product lines on the basis of sales dollars. The warehouse rental cost is $3 per square foot per year. The warehouse contains 48,000 square feet of space of which 7,200 square feet is used by the cookbook line, 24,000 square feet by the travel guide line, and 16,800 square feet by the d. The general sales cost above includes the salary of the sales manager and other sales costs not traceable to any specific product line. This cost has been allocated to the product lines on the basis of sales dollars. e. The general administration cost and depreciation of office facilities both relate to administration of the company as a whole. These costs have been allocated equally to the three product lines 1. All other costs are traceable to the three product lines in the amounts shown on the income statement above Help Prepare a new contribution format segmented Income statement for the month. Adjust allocations of equipment depreciation and of warehouse rent as indicated by the additional Information provided. (Round your intermediate calculations to 2 decimal places.) Total Company Cookbook Travel Guide Handy Spelle Variable expenses Total variable expenses Traceable foxed expenses Total traceable fixed expenses Common fixed expenses Help Total variable expenses Traceable fred expenses Total traceable fixed expenses Common fxed expenses Total common faced expenses Req2A > Complete this question by entering your answers in the tabs below. Req1 Req 2A Reg 26 Part 1 Reg 2n Part 2 Do you agree with management plan to eliminate the cookbook? Yes ONO Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 28 Part 1 Req 28 Part 2 Compute the contribution margin ratio for each product. Round your answers to the nearest whole percent Cookbook Travel Guide Handy Spelle Contribution margin ratio Complete this question by entering your answers in the tabs below. Req1 Req ZA Req 28 Part 1 Req 28 Part 2 Based on the statement you have prepared, do you agree with the decision to focus all available resources on promoting the travel guide? OYes No