Question 6 (11 points) Polar Company has two divisions, Northern and Southern. The company's overall sales are $350,000 for the year ended July 31,
Question 6 (11 points) Polar Company has two divisions, Northern and Southern. The company's overall sales are $350,000 for the year ended July 31, 2022 Information for the Northern Division Variable expense ratio of 75% - Fixed expenses of $30,000 (these expenses would discontinue if the Northern Division is dropped). Information for the Southern Division - Sales of $100.000 - Contribution margin ratio of 40% Other information. Total fixed expenses for the company are $95,000, of this amount, $5,000 is unavoidable regardless of which divisions are kept or dropped. Required: 1 Prepare a segmented income statement in good form. (7 marks) 2. Calculate the operating leverage for the company. (2 marks) 3. Should the company drop either Division? Use calculations to support your answer. (2 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started