Shown as follows are responsibility income statements for Butterfield, Inc., for the month of March.

	Investment Centers
	Butterfield, Inc						Division 1						Division 2
	Dollars			%			Dollars			%			Dollars			%
Sales	$	430,000		100.00	%		$	290,000		100	%		$	140,000		100	%
Variable costs		216,000		50.23				174,000		60				42,000		30
Contribution margin	$	214,000		49.77	%		$	116,000		40	%		$	98,000		70	%
Fixed costs traceable to divisions		128,100		29.79				60,900		21				67,200		48
Division responsibility margin	$	85,900		19.98	%		$	55,100		19	%		$	30,800		22	%
Common fixed costs		50,000		11.63
Income from operations	$	35,900		8.35	%

	Profit Centers
	Division 1						Product A						Product B
	Dollars			%			Dollars			%			Dollars			%
Sales	$	290,000		100	%		$	116,000		100.00	%		$	174,000		100.00	%
Variable costs		174,000		60				52,200		45.00				121,800		70.00
Contribution margin	$	116,000		40	%		$	63,800		55.00	%		$	52,200		30.00	%
Fixed costs traceable to products		40,600		14				12,180		10.50				28,420		16.33
Product responsibility margin	$	75,400		26	%		$	51,620		44.50	%		$	23,780		13.67	%
Common fixed costs		20,300		7
Responsibility margin for division	$	55,100		19	%

Required:

a. The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $4,000 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 Division 2 increase to $160,000.

BUTTERFIELD,INC Responsibility Income Statement For April Division 1 Butterfield, Inc. Division 2 Dollars Percent Dollars Percent Dollars Percent ales 100.001 % riable costs 100.00 | % 0.00 | % ontribution margin 0.00 % xed costs traceable to divisions 0.00 | % 0.00|96 | $ vision responsibility margin 100.001% 1 $ ommon costs 0 100.00 | % come from operations