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Hernandez Enterprises has two divisions-Retail and Wholesale. Cost and revenue data for each division for the current month are as follows. Divisions Sales Variable costs
Hernandez Enterprises has two divisions-Retail and Wholesale. Cost and revenue data for each division for the current month are as follows. Divisions Sales Variable costs as a percentage of sales Fixed costs traceable to product lines Retail Wholesale $500,000 $360,000 30% 40% $120,000 $ 250,000 In addition, fixed costs that are common to both divisions amount to $96,000. Required: a. Prepare the company's responsibility income statement for the current month. Report the responsibility margin for each division and income from operations for the company as a whole. Also include columns showing all dollar amounts as percentages of sales. b-1. According to the analysis performed in part a, which division is most profitable in terms of dollars of responsibility margin that it contributes to the company? b-2. Should the common fixed costs be considered when determining the profitability of the two divisions individually? c. The company has $15,000 to be used in advertising for one of its two divisions and expects that this expenditure will result in additional sales of $60,000. How should the company decide which division to advertise? Complete this question by entering your answers in the tabs below. Req A Req B1 Req 82 Req C Prepare the company's responsibility income statement for the current month. Report the responsibility margin for each division and income from operations for the company as a whole. Also include columns showing all dollar amounts as percentages of sales. (Round your percentage answers to the nearest whole percentage.) Req A Req 81 Req 82 Req C Prepare the company's responsibility income statement for the current month. Report the responsibility margin for each division and income from operations for the company as a whole. Also include columns showing all dollar amounts as percentages of sales. (Round your percentage answers to the nearest whole percentage.) HERNANDEZ ENTERPRISES Responsibility Income Statement For the Current Month Entire Company Retail Division Dollars Percent Dollars Percent Dollars Wholesale Division Percent % $ 0 0% $ 0 0% $ 0 0% 0% S 00% $ 0 0% $ 0 0% Req81>
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