i would greatly appreciate your help! thank you!
Problem 1 Student Painters, Inc., operates two segments, interior and exterior. The revenue and expense data follow: Interior Exterior Total Net sales $345,800 $564,200 $910,000 Direct expenses: Cost of goods sold 190,190 282,100 472,290 Selling 34,580 56,420 91,000 Administrative 18,900 26,100 45,000 Uncollectible accounts 2,400 6,600 9,000 Indirect expenses (all fixed): Selling 126,000 Administrative 156,000 *All the direct expenses are variable except administrative expense, which is fixed. a. Prepare a schedule showing the contribution margin, the contribution to indirect expenses of each segment, and net income for the company as a whole. Do not allocate indirect expenses to the segments. b. Assume that indirect selling expenses are to be allocated to segments on the basis of net sales (round to the nearest %) and that indirect administrative expenses are to be allocated on the basis of direct administrative expenses. Prepare a statement (starting with the contribution to indirect expenses from part a) showing the allocation of indirect expenses and the net income of each segment. c. Based on the information calculated in parts a and b, should Student Painters drop either of the two segments. Why or why not? Total 24 Parta: 25 Student Painters, Inc. 26 Segment Income Statements 27 Interior Exterior 28 Net Sales 29 Variable Costs: 30 31 32 33 34 35 Contribution to Indirect costs 36 Interior and Exterior Self check 37 38 39 Net Income 40 Self check: 41 42 Part b: 43 Contribution to Indirect costs 44 Indirect costs: 45 Selling expense 46 Hint? 47 Admin. Expense 48 Hint? 49 Net Income 50 Self check 51 52 Parte from above 54 56 Problem 2: Investment Centers SHOW ALL CALCULATIONS!! Problem 2: Investment Centers SHOW ALL CALCULATIONS!! Problem 2 Goodwin Company has three segments: 1, 2, and 3. Data regarding these segments follow: 2 Segment 1 Segment 2 Segment 3 Contribution to indirect expenses (or segment income) $387,500 $233,750 $146,250 Assets directly used by and identified with the segment (investment) $2,500,000 $1,375,000 $1,125,000 a. Calculate the return on investment for each segment. Rank them from highest to lowest using return on Investment as the measure. 3 54 65 66 67 b. Assume the cost of capital is 12% for a segment. Calculate the residual income for each segment. Rank them from highest to lowest using residual income. c. Repeat (b), but assume the desired cost of capital is 15%. Rank the segments from highest to lowest using residual income. 68 70 72 d. Review your rankings above. Is there one segment consistently performing better than the others? Why or why not? a. Return on Investment: Hint? Seg 1 Seg 2 Seg 3 = ROI Rankings (1 best to 3 worst) Self check: b. Residual income - 12% Hint? Seg 1 Seg 2 Seg 3 2 3 4 35 86 87 = Residual Income Rankings (1 best to 3 worst) Self check: c. Residual Income - 15% 88 89 Hint? Seg 1 Seg 2 Seg 3 90 91 92 93 94 95 = Residual Income Rankings (1 best to 3 worst) Self check: Comment on the rankings: 96 97
