Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show computations or how you arrived at percentages. Thank you. Muscle Bound Co. sells home exercise equipment. The company has two sales territories, Eastern

Please show computations or how you arrived at percentages. Thank you.

Muscle Bound Co. sells home exercise equipment. The company has two sales territories, Eastern and Western. Two products are sold in each territory: FasTrak (a Nordic ski simulator) and RowMaster (a stationary rowing machine).

During January, the following data are reported for the Eastern territory.

FasTrak RowMaster
Sales $ 600,000 $ 750,000
Contribution margin ratios 55 % 40 %
Traceable fixed costs $ 80,000 $ 150,000

Common fixed costs in the Eastern territory amounted to $120,000 during the month.

During January, the Western territory reported total sales of $600,000, variable costs of $270,000, and a responsibility margin of $200,000. Muscle Bound also incurred $180,000 of common fixed costs that were not traceable to either sales territory.

In addition to being profit centers, each territory is also evaluated as an investment center. Average assets utilized by the Eastern and Western territories amount to $14,000,000 and $12,000,000, respectively.

Required:

a. Prepare the January income statement for the Eastern territory by product line.

b. Prepare the January income statement for the company showing profits by sales territories. Conclude your statement with income from operations for the company and with responsibility margins for the two territories.

c. Compute the rate of return on average assets earned in each sales territory during the month of January.

e-1. The manager of the Eastern territory is authorized to spend an additional $50,000 per month to advertise one of the products. Based on past experience, the manager estimates that additional advertising will increase the sales of either product by $120,000?

e-2. On which product should the manager focus this advertising campaign?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

free rate is 4.00%. What is Jameson's current stock price, Po

Answered: 1 week ago

Question

1. Discuss the four components of language.

Answered: 1 week ago

Question

a. How many different groups were represented?

Answered: 1 week ago