Question
Tati Company segments its Income statement into East and West Divisions. The company has a 10% required rate of return. The company's overall sales are
Tati Company segments its Income statement into East and West Divisions. The company has a 10% required rate of return. The company's overall sales are $510,000. its contribution margin ratio is 46% and net operating income is $10,000. the East Division contribution margin is $150,000 and its contribution margin ratio is 44%. the West Division segment margin is $28,000
The company has $90,000 of common fixed expenses that can't be traced to either division.
the company has $400,000 of average operating assets to the east division.
The company traces $135,000 of average operating asses to the west division
the company has $100,000 of average operating assets that can't be traced to a specific division.
Required:
1- Prepare an income statement for the Tati company that uses the contribution format and segmented by division, including columns for the % of sales.
2- In addition, for the company as a whole and for each segment, calculate the ROI and RI
3- Discuss which division appears to be performing better
4- based on the current sales mix, what total sales would the company need to show -0- RI?
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