the questions are attached,

In the above income statement, depreciation on equipment has been allocated on the basis of sales dollars. Its usage indicates that it is used 40% 50% and 10% respectively on the three products.

This assignment contributes 15% to the total assessment for this course Case 1 (Chapter 6 Topic: Segmental Reporting): Qfoods co. produce three products that it offers for sale: (i) wheat cereal, (ii) flour, and (iii) corn. Each product sells for $10 per package. Materials costs are $3.00, $4.20, and $1.80 per bag respectively. Sales commissions are 10% of sales for any product; while all other costs are fixed costs. The income statement for the year as follows: Info. Total Sales $6000 00 Costs: Direct Materials Sales Commission Advertising Salaries Depreciation Equipment Warehouse Rent General Administration Total Costs on Wheat Cereal $200000 Flour Corn $300000 $1000 00 204000 60000 123000 0 66000 30000 60000 20000 48000 1260000 30000 60000 18000 10000 15000 34000 10000 21000 15000 11000 5000 12000 90000 4000 30000 6000 30000 2000 30000 (206000) (288000) (6000) 12000 (91000 ) 9000 (58500 0) Net Operating 15000 Income (loss) Additional Information: a. The same equipment is used to package all three products. In the above income statement, depreciation on equipment has been allocated on the basis of sales dollars. Its usage indicates that it is used 40% 50% and 10% respectively on the three products. b. All three products are stored in the same warehouse. In the above income statement, the warehouse rent has been allocated on the basis of sales dollars. The size of the warehouse is 24000 square feet, of which 8000, 14000 and 2000 square feet are used respectively on the three products. Qfoods paid $0.50 per square foot / yearly rent. c. The general administration costs relate to the administration of the company as a whole (common costs). In the above income statement, these costs have been divided equally among the three product lines. d. All other costs are traceable to the product lines. Required: a) Using an excel sheet that shows the relevant formulas; Prepare a new contribution format segmented income statement for the year. Adjust the allocation of equipment depreciation and warehouse rent as indicated by the additional information provided. (2 marks) b) After preparing the income statement (based on requirement a), management has decided to (1) eliminate the wheat cereal because it is not returning a profit, and (2) to focus all available resources on promoting the flour: 1. Based on the statement you have prepared; do you agree with the decision to eliminate the wheat cereal? Explain. (1 marks) 2. Based on the statement you have prepared; do you agree with the decision to focus all available resources on promoting the flour? Assume that an ample market is available for all three products. (2 marks) c) Why are not common costs allocated to segments under the contribution approach? (1 mark) (Total 6 marks) General guidelines: Your report should contain: (a) Group assessment cover sheet. This cover sheet must include your team members' full names and student ID numbers. (b)The report should contain, immediately after the cover sheet, a paragraph which highlights the contribution of each member towards the accomplishment of the project and also 2 the steps and procedures undertaken in order to come up with this contribution. (c) The report is a joint responsibility, and each member is responsible for numerical accuracy, presentation, and standard of writing. If there are problems within the group which you cannot resolve, please discuss with your instructor IMMEDIATELY as no late complaints will be considered. If the problems are not resolved and it is felt there has been an unequal contribution, then, exceptionally, you should inform your instructor of the proportion of the work which has been contributed by each member. (d)Please use Times New Roman as the font, size 12, and lines are to be 1.5 spaced NOT SINGLE SPACED, also ADJUST THE LINES IN ALL THE PARAGRAPHES. (e) To satisfy the requirement C in each case, you are expected to refer to several internet websites or books and state their links in the list of references at the end of your report. Failing to do so would be treated as plagiarism- a breach of regulations with serious penalties. 3