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Shown as follows are responsibility income statements for Butterfield, Inc., for the month of March Investment Centers Butterfield, Inc Dollars Division 1 Division 2 Dollars
Shown as follows are responsibility income statements for Butterfield, Inc., for the month of March Investment Centers Butterfield, Inc Dollars Division 1 Division 2 Dollars 100.00% $300,000 180,000 Sales Variable costs Contribution margin Fixed costs traceable to divisions Division responsibility margin Common fixed costs Income from operations Dollars 100% $160,000 48,000 40% $112,000 76,800 19% $ 35,200 $460,000 49.57 $232,000 50.43% $120,000 30.39 $ 92,200 20.04% $ 57,000 100% 30 70% 48 228.000 60 139,800 63,000 40,000 $52,200 11.35% 8.70 Profit Centers Product A Division 1 Product B Dollars 100.00% $180,000 126,000 Dollars 300,000 180,000 120,000 42,000 $ 78,000 21,000 $ 57,000 Dollars 100% $120,000 100.00% 70.00 Sales Variable costs Contribution margin Fixed costs traceable to products Product responsibility margin Common fixed costs Responsibility margin for division 54,000 4500 60 40%$66,000 55.00% $54,000 30.00% 14 26% $53,400 44.50% $24,600 13.67% 45.00 12,600 10.50 29,400 16.33 19% Required: a. The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $3,000 per month and is expected to increase the sales of whichever product is advertised by $40,000 per month. Compute the expected increase in the responsibility margin of Division 1 assuming that (1) product A is advertised and (2) product B is advertised e. Prepare an income statement for Butterfield, Inc., by division, under the assumption that in April the monthly sales in Division2 increase to $180,000 Complete this question by entering your answers in the tabs below
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