Question 1

Required information Exercise 7-16 Working with a Segmented Income Statement; Break-Even Analysis [L07-4, L07-5] [The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: office Total Company Chicago Minneapolis Sales $1, 050, 090 100.0% $ 210,000 100% $ 840,000 100% Variable expenses 567, 090 54.0% 63, 000 30% 504, 000 60% Contribution margin 483 , 090 46.0% 147, 000 70% 336, 000 40% Traceable fixed expenses 235 , 290 22.4% 109, 200 52% 126,000 15% Office segment margin 247 , 800 23.6% $ 37,800 18% $ 210,006 25% Common fixed expenses not traceable to offices 168, 090 16.0% Net operating income 79 , 800 7.6% Exercise 7-16 Part 1 Required: 1-a. Compute the companywide break-even point in dollar sales. 1-b. Compute the break-even point for the Chicago office and for the Minneapolis office. 1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?Required: 1-a. Compute the companywide break-even point in dollar sales. 1-b. Compute the break-even point for the Chicago office and for the Minneapolis office. 1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Compute the companywide break-even point in dollar sales. (Round "CM ratio" to 2 decimal places and final answer to the nearest whole dollar amount.) Break-even point in dollar salesComplete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Compute the break-even point for the Chicago office and for the Minneapolis office. (Round "CM ratio" to 2 decimal places and final answers to the nearest whole dollar amount.) Break-Even Point Chicago office Minneapolis officeRequired: 1-a. Compute the companywide break-even point in dollar sales. 1-b. Compute the break-even point for the Chicago office and for the Minneapolis office. 1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points? Greater than Less than OEqual toRequired information Exercise 7-16 Working with a Segmented Income Statement; Break-Even Analysis [L07-4, LO7-5] [The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Office Total Company Chicago Minneapolis Sales $1, 050, 090 100.0% $ 210,000 100% $ 840,000 100% Variable expenses 567, 090 54.0% 63, 000 30% 504, 000 60% Contribution margin 483, 000 46.0% 147,000 70% 336, 000 40% Traceable fixed expenses 235, 200 22.4% 109, 200 52% 126, 000 15% Office segment margin 247, 806 23.6% 37, 800 18% $ 210, 000 25% Common fixed expenses not traceable to offices 168 , 090 16.0% Net operating income 79 , 809 7.6% Exercise 7-16 Part 2 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $105,000 per year? Assume no change in cost behavior patterns. Net operating income increaseRequired information Exercise 7-16 Working with a Segmented Income Statement; Break-Even Analysis [L07-4, L07-5] [The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: office Total Company Chicago Minneapolis Sales $1, 050, 090 100.0% $ 210,000 100% $ 840, 000 100% Variable expenses 567, 090 54.0% 63,000 30% 504, 000 60% Contribution margin 483, 090 46.0% 147, 000 70% 336, 000 40% Traceable fixed expenses 235, 200 22.4% 109, 200 52% 126, 000 15% Office segment margin 247 , 800 23.6% $ 37, 800 18% $ 210,000 25% Common fixed expenses not traceable to offices 168 , 090 16.0% Net operating income $ 79, 800 7. 6% Exercise 7-16 Part 3Exercise 7-16 Part 3 3. Assume that sales in Chicago increase by $70,000 next year and that sales in Minneapolis remain unchanged. Assume no change in xed costs. a. Prepare a new segmented income statement for the company. {Round your percentage answers to 1 decimal place {I'.e. 0.1234 should be entered as 123).} Problem 7-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LOT- 2] Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials 5 20 Direct labor $ 12 Variable manufacturing overhead $ 3 Variable selling and administrative S 1 Fixed costs per year: Fixed manufacturing overhead 5 398,600 Fixed selling and administrative expenses $ 213,000 During its first year of operations, Haas produced 50,000 units and sold 50,000 units. During its second year of operations, it produced 65,000 units and sold 40,000 units. In its third year, Haas produced 30,000 units and sold 55,000 units. The selling price of the company's product is $48 per unit Required: 1. Compute the company's brea k-even point in unit sales. 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Complete this question by entering wur answers in the labs below. Req 1 Req 2A Req 23 Rat] 3A Rec] 33 Compute the oompany's breakeven point in unit sales. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3A Req 3B Compute the unit product cost for Year 1, Year 2, and Year 3. Assume the company uses variable costing. Year 1 Year 2 Year 3 Unit product costComplete this question by entering wur answers in the tabs below. Prepare an income statement for Year 1, Year 2, and Year 3. Assume the ncompanwylr uses variable costing. Nel operating income {loss} Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3A Req 3B Compute the unit product cost for Year 1, Year 2, and Year 3. Assume the company uses absorption costing. (Round your intermediate calculations and final answers to 2 decimal places.) Year 1 Year 2 Year 3 Unit product costComplete this question by entering your answers in the tabs below. Ken 1 RBI] 2:\"; RBI] ZB Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses absorption ousting. (Round your intermediate calculations to 2 decimal places.) Net operating income {loss} Problem 7-21 Segment Reporting and Decision-Making [LO7-4] Vulcan Company's contribution format income statement for June is as follows: Vulcan Company Income Statement For the Month Ended :Iune 36 Sales $ 966,666 Variable expenses 499,390 Contribution margin 566,666 Fixed expenses 4T6,666 Net operating income $ 36,666 Management is disappointed with the company's performance and is wondering what can be done to improve profits. By examining sales and cost records, you have determined the following: a. The company is divided into two sales territoriesNorthern and Southern. The Northern Territory recorded $400,000 in sales and $180,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $216,000 and $135,000 are traceable to the Northern and Southern Territories, respectively. The rest of the xed expenses are common to the two territories. b. The company is the exclusive distributor for two productsPaks and Tibs. Sales of Paks and Tibs totaled $200,000 and $200,000, respectively. in the Northern territory during June. Variable expenses are 26% of the selling price for Paks and 64% for Tibs. Cost records show that $92,000 of the Northern Territory's xed expenses are traceable to Paks and $42,000 to Tibs, with the remainder common to the two products. Required: 1a. Prepare contribution format segmented income statements for the total company broken down between sales territories. 1b. Prepare contribution format segmented income statements for the Northern Territory broken down by product line. Required: 1-a. Prepare contribution format segmented income statements for the total company broken down between sales territories. 1b. Prepare contribution format segmented income statements for the Northern Territory broken down by product line. Complete this question by entering your answers in the limbs below. Req 1A Req IB Prepare oontribution format segmented income statements for the total company broken down between sales territories. (Round your percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3).) Required: 1a. Prepare contribution format segmented income statements for the total company broken down between sales territories. 1b. Prepare contribution format segmented income statements for the Northern Territory broken down by product line. Complete this question by entering wur answers in the tabs below. Prepare contribution format segmented income statements for the Northern Territory broken down by product line. {Round your percentage answers to 1 decimal place (Le. 0.1234 should be entered as 12.3).) Problem 7-23 Absorption and Variable Costing; Production Constant, Sales Fluctuate [LO7-1, LO7-2, LO7-3] Tami Tyler opened Tami's Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University. Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (28,350 units) $ 1, 134, 090 Variable expenses: Variable cost of goods sold $ 481,950 Variable selling and administrative 195, 615 677, 565 Contribution margin 456, 435 Fixed expenses: Fixed manufacturing overhead 300, 150 Fixed selling and administrative 178, 785 478,935 Net operating loss $ ( 22,500) Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter. At this point, Ms. Tyler is manufacturing only one product-a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow: Units produced 33, 350 Units sold 28, 350 Variable costs per unit: Direct materials $ 7.40 Direct labor $ 7.90 Variable manufacturing overhead 1.70 Variable selling and administrative $ 6.90Required: 1. Complete the following: a. Compute the unit product cost under absorption costing. b. What is the company's absorption costing net operating income (loss) for the quarter? c. Reconcile the variable and absorption costing net operating income [loss] figures. 3. During the second quarter of operations, the company again produced 33,350 units but sold 38,350 units. [Assume no change in total fixed costs.) a. What is the company's variable costing net operating income (loss) for the second quarter? b. What is the company's absorption costing net operating income [loss] for the second quarter? c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter. Complete this question by entering your answers in the tabs below. J Req 1A H Req 13 Reg 1C RBI] 3A RBI] BB Req 3C Compute the unit product cost under absorption costing. (Round your answer to 2 decimal places} _:| Complete this queStion by entering your answers in the labs below. What is the company's absorption costing net operating income (loss) for the quarter? (Round your intermediate calculations to 2 decimal places.) Net operating income {loss} Complete this question by entering your answers in the labs below. Reconcile the variable and absorpon oosng net operating income (loss) gures. (Losses and deductions should be entered as a negative.) Variable costing net operating income {loss} Absorption cosiing net operating income {loss} Complete this queson by entering your answers in the 1.1le below. During the second quarter of operations, the company again produced 33,350 units but sold 38,350 units. (Assume no change in total xed costs.) What is the company's variable ousting net operating income {loss} for the second quarter? Net operating income {loss} Complete this question by entering your answers in the labs below. During the second quarter of operations, the company again produced 33,350 units but sold 38,350 units. (Assume no change in total xed costs.) What is the company's absorption costing net opelating income (loss) for the second quarter? (Round your intermediate calculations to 2 decimal places.) Net operating income {loss} Complete this question by entering your answers in the tabs below. During the second quarter of operations, the company again produced 33,350 units but sold 38,350 units. (Assume no change in total fixed costs.) Reconcile the variable costing and absorption costing net operating incomes (losses) for the second quarter. (Losses and deductions should be entered as a negative.) Variable costing net operating income {loss} Absorption costing net operating income {loss}