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Please show calculations as well! Thankyou very much Bobbin Toes manufactures summer sandals and casual shoes. The most recent segmented income statement for the corporation
Please show calculations as well! Thankyou very much
Bobbin Toes manufactures summer sandals and casual shoes. The most recent segmented income statement for the corporation follows: Total Sandals Casual shoes Sales $2,470,000 $470,000 $2,000,000 Less: variable expenses 800,000 Contribution margin 1,200,000 925,000 1,545,000 1,350,000 $195,000 125,000 345,000 450,000 ($105,000) Less: fixed expenses 900,000 Operating income (Loss) $300,000 As the controller, you are looking at the financial results and trying to determine what should be done to change things around. You have considered several factors and the results are summarized below: - the market research team has analysis that shows if the sandal line is dropped, the sale of casual shoes will drop by 8%. - $240,000 of the fixed costs currently being changed to the sandal line are head office allocations that will continue even if the department is shut down. Required: a. a. Based on the information about, should EM keep or drop the sandal line based on a quantitative analysis? You must support your answer with appropriate calculations. (6 marks) b. The marketing team has come back to you with an analysis that shows if advertising expenditure was increased by $50,000, then sandal sales would go up by 6% and casual shoes would go up by 3%. Should advertising expenditure be increased? You must support your answer with appropriate calculations
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