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Please help with Part E, thank you. Shown as follows are responsibility income statements for Butterfield, Inc., for the month of March. Sales Variable costs
Please help with Part E, thank you.
Shown as follows are responsibility income statements for Butterfield, Inc., for the month of March. Sales Variable costs Contribution margin Fixed costs traceable to divisions Division responsibility margin Common fixed costs Income from operations Investment Centers Butterfield, Inc Division 1 Division 2 Dollars 8 Dollars 8 Dollars 8 $ 460,000 100.00% $ 340,000 100% $ 120,000 100% 240,000 52.17 204,000 60 36,000 30 $ 220,000 47.838 $ 136,000 40% $ 84,000 708 129,000 28.04 71,400 21 57,600 48 $ 91,000 19.788 $ 64,600 19% $ 26,400 228 40,000 8.70 $ 51,000 11.098 Sales Variable costs Contribution margin Fixed costs traceable to products Product responsibility margin Common fixed costs Responsibility margin for division Profit Centers Division 1 Product A Product B Dollars $ Dollars $ Dollars 8 $ 340,000 100% $ 136,000 100.008 $ 204,000 100.00% 204,000 60 61,200 45.00 142,800 70.00 $ 136,000 40% $ 74,800 55.00$ $ 61,200 30.00% 47,600 14 14,280 10.50 33, 320 16.33 $ 88,400 26% $ 60,520 44.50% $ 27,880 13.67% 23,800 7 $ 64,600 19% Required: a. The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $3,000 per month and is expected to increase the sales of whichever product is advertised by $30,000 per month. Compute the expected increase in the responsibility margin of Division 1 assuming that (1) product A is advertised and (2) product B is advertisedStep by Step Solution
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