Please show all work
Question 1: Please show all steps. Shown as follows are responsibility income statements for Butterfield. Inc.. for the month of March. Investment Centers Butterfield, Inc: Division 1 Division 2 Dollars it Dollars is Dollars % Sales $ 420,000 100.00% $ 260,000 100% $ 160,000 100% Variable costs 204,000 48.57 156,000 60 48,000 30 Contribution margin 5 216,000 51.43% $ 104,000 40% $ 112,000 70% Fixed costs traceable to divisions 131,400 31.29 54,600 21 76,800 43 Division responsibility margin 5 84,600 20.14% $ 49,400 19% $ 35,200 22% Common fixed costs 40,000 9.52 Income from operations $ 44,600 10.62% ' Profit Centers Division 1 Product A Product B Dollars i Dollars % Dollars % Sales 5 260,000 100% $ 104,000 100.00% s 156,000 100.00% Variable costs 156,000 60 46,300 45.00 109,200 70.00 Contribution margin 5 104,000 40% 5 57,200 55.00% 5 46,800 30.00% Fixed costs traceable to products 36,400 14 10,920 10.50 25,480 16.33 Product re5ponsibility margin $ 67,600 26% $ 46,230 44.50% $ 21,320 13.67% Common fixed costs 13,200 ? Responsibility margin for division $ 49,400 19% Required: 3. The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $2,000 oer month and is expected to increase the sales of whichever product is advertised by $40,000 per month. Compute the expected ncrease in the responsibility margin of Division 1 assuming that (1) product A is advertised and (2) product B is advertised. 3. Prepare an income statement for Butterfield, Inc. by division, under the assumption that in April the monthly sales in Division 2 ncrease to $180,000. Question 2: Please show all steps. | Shown as follows is a segmented income statement for Drexeerall during the current month. Profit: Centers DrexelHall store 1. store 2 Store 3 Dollar: 8 Dollar: % Dollars B Dollars 0 sales $1,800,000 100% $600,000 100% $600,000 100% $600,000 100 0 variable costs 1,080,000 60 372,000 62 371,000 63 330,000 55 Contribution margin $ 720,000 I100 $228,000 38% $222,000 37% $270,000 45 0 Traceable fixed costs: controllable 432,000 24 120,000 20 102,000 1'} 210,000 35 Performance margin S 288,000 16% $108,000 18! $120,000 20! S 60,000 10 i. Traceeble fixed costs: committed 180,000 10 48,000 3 56,000 11 66,000 11 store responsibility margin 5 108,000 6% $ 60,000 10% 5 54,000 93 $ (6,000) [11% Common fixed costs 36,000 2 Income from operations $ 72,000 4% All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established rst and was buitt at a lower cost than were Stores 2 and 3. This lower cost results in less depreciation expense for Store 1. Store 2 follows a policy of minimizing both costs and sales prices. Store 3 follows a policy of providing extensive customer service and charges slightly higher prices than the other two stores. Top management of DrexelHall is considering closing Store 3. The three stores are close enough together that management estimates closing Store 3 would cause sales at Store 1 to increase by $60,000, and sales at Store 2 to increase by $120,000. Closing Store 3 is not expected to cause any change in common xed costs. Compute the increase or decrease that closing Store 3 should cause in: a. Total monthly sales for Drexel-Hall stores. b. The monthly responsibility margin of Stores 1 and 2. c. The company's monthly income from operations
