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The following contribution margin income statement represents total amounts for Romano Corporation which sells two products (V) & (2) $6,000,000 Sales $3,400,000 Variable expenses Contribution
The following contribution margin income statement represents total amounts for Romano Corporation which sells two products (V) & (2) $6,000,000 Sales $3,400,000 Variable expenses Contribution margin $2,600,000 Fixed expenses $1,400,000 I $1,200,000 Net operating income Use the following information to prepare segmented income statement to show which product is more profitable for Romano Corporation? 1. Sales of product (V) represents 60% of total sales 2. Variable expenses are divided 70% & 30% between the two products respectively. 3. Traceable fixed expenses for product (V) and (2) is 40% and 60% 4. If an advertising campaign of $5,000 would increase sales of product (V) by 30% or increase sales of product (Z) by 20%. What do you recommend? Show your computation
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