6-399
166.
Higgins Corporation sells three products, Product A, Product B, and Product C. Data
concerning the company’s most recent month of operations, June, appear below:
Products
Total
Company
A
B
C
Sales
$1,500,000
$750,000
$450,000
$300,000
Variable expenses
$450,000
$270,000
Contribution margin ratio
38%
Traceable fixed expenses
$180,000
$150,000
$90,000
The total fixed expense for the company was $525,000.
Common fixed expenses for Higgins Corporation for June were:
167.
Higgins Corporation sells three products, Product A, Product B, and Product C. Data
concerning the company’s most recent month of operations, June, appear below:
Products
Total
Company
A
B
C
Sales
$1,500,000
$750,000
$450,000
$300,000
Variable expenses
$450,000
$270,000
Contribution margin ratio
38%
Traceable fixed expenses
$180,000
$150,000
$90,000
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
Segment margin
The total fixed expense for the company was $525,000.
The product line segment margin for Product A for June was:
168.
Higgins Corporation sells three products, Product A, Product B, and Product C. Data
concerning the company’s most recent month of operations, June, appear below:
Products
Total
Company
A
B
C
Sales
$1,500,000
$750,000
$450,000
$300,000
Variable expenses
$450,000
$270,000
Contribution margin ratio
38%
Traceable fixed expenses
$180,000
$150,000
$90,000
Sales
Variable expenses
Contribution margin
The total fixed expense for the company was $525,000.
The contribution margin in dollars for Product B for June was:
6-402
169.
Meyer Corporation has two sales areas: North and South. During April, the contribution
margin in the North was $90,000, or 30% of sales. The segment margin in the South was
$25,000, or 10% of sales. Traceable fixed expenses were $30,000 in the North and $15,000
in the South. Meyer Corporation reported a total net operating income of $52,000.
The total sales for Meyer Corporation were:
6-403
6-404
170.
Meyer Corporation has two sales areas: North and South. During April, the contribution
margin in the North was $90,000, or 30% of sales. The segment margin in the South was
$25,000, or 10% of sales. Traceable fixed expenses were $30,000 in the North and $15,000
in the South. Meyer Corporation reported a total net operating income of $52,000.
The total fixed expenses for Meyer Corporation were:
6-405
6-406
171.
Meyer Corporation has two sales areas: North and South. During April, the contribution
margin in the North was $90,000, or 30% of sales. The segment margin in the South was
$25,000, or 10% of sales. Traceable fixed expenses were $30,000 in the North and $15,000
in the South. Meyer Corporation reported a total net operating income of $52,000.
The variable costs for the South area were:
6-407
6-408
172.
O’Neill, Incorporated’s segmented income statement for the most recent month is given
below.
Total
Company
Store A
Store B
Sales
$300,000
$100,000
$200,000
Variable expenses
192,000
72,000
120,000
Contribution margin
108,000
28,000
80,000
Traceable fixed expenses
76,000
21,000
55,000
Segment margin
32,000
$7,000
$25,000
Common fixed expenses
27,000
Net operating income
$5,000
For each of the following questions, refer back to the above original data.
If Store B sales increase by $20,000 with no change in fixed expenses, the overall
company net operating income should:
6-409
173.
O’Neill, Incorporated’s segmented income statement for the most recent month is given
below.
Total
Company
Store A
Store B
Sales
$300,000
$100,000
$200,000
Variable expenses
192,000
72,000
120,000
Contribution margin
108,000
28,000
80,000
Traceable fixed expenses
76,000
21,000
55,000
Segment margin
32,000
$7,000
$25,000
Common fixed expenses
27,000
Net operating income
$5,000
For each of the following questions, refer back to the above original data.
The marketing department believes that a promotional campaign at Store A costing
$6,000 will increase sales by $15,000. If its plan is adopted, overall company net operating
income should:
6-410
174.
O’Neill, Incorporated’s segmented income statement for the most recent month is given
below.
Total
Company
Store A
Store B
Sales
$300,000
$100,000
$200,000
Variable expenses
192,000
72,000
120,000
Contribution margin
108,000
28,000
80,000
Traceable fixed expenses
76,000
21,000
55,000
Segment margin
32,000
$7,000
$25,000
Common fixed expenses
27,000
Net operating income
$5,000
Current variable expenses
Proposed variable expenses
Reduction in variable expenses
Less: Proposed increase in traceable fixed expenses
Effect on net operating income
For each of the following questions, refer back to the above original data.
A proposal has been made that will lower variable expenses in Store A to 62% of sales.
However, this reduction can only be accomplished by an increase in Store A’s traceable
fixed expenses of $8,000. If this proposal is implemented and sales remain constant,
overall company net operating income should:
6-411
175.
O’Neill, Incorporated’s segmented income statement for the most recent month is given
below.
Total
Company
Store A
Store B
Sales
$300,000
$100,000
$200,000
Variable expenses
192,000
72,000
120,000
Contribution margin
108,000
28,000
80,000
Traceable fixed expenses
76,000
21,000
55,000
Segment margin
32,000
$7,000
$25,000
Common fixed expenses
27,000
Net operating income
$5,000
For each of the following questions, refer back to the above original data.
If sales in Store B increase by $30,000 as a result of a $5,000 increase in traceable fixed
expenses:
6-412
6-413
176.
O’Neill, Incorporated’s segmented income statement for the most recent month is given
below.
Total
Company
Store A
Store B
Sales
$300,000
$100,000
$200,000
Variable expenses
192,000
72,000
120,000
Contribution margin
108,000
28,000
80,000
Traceable fixed expenses
76,000
21,000
55,000
Segment margin
32,000
$7,000
$25,000
Common fixed expenses
27,000
Net operating income
$5,000
For each of the following questions, refer back to the above original data.
Currently the sales clerks receive a salary of $7,000 per month in Store B. A proposal has
been made to change from a fixed salary to a sales commission of 5%. Assume that this
proposal is adopted, and that as a result sales increase by $20,000. The new segment
margin for Store B should be:
Projected sales
Projected variable expenses
6-414
6-415
177.
Clemmens Corporation has two major business segments: Consumer and Commercial.
Data for the segments and for the company for August appear below:
Sales revenues, Consumer
$390,000
Sales revenues, Commercial
$530,000
Variable expenses, Consumer
$179,000
Variable expenses, Commercial
$265,000
Traceable fixed expenses, Consumer
$59,000
Traceable fixed expenses, Commercial
$64,000
Variable expenses
Contribution margin
In addition, common fixed expenses totaled $265,000 and were allocated as follows:
$135,000 to the Consumer business segment and $130,000 to the Commercial business
segment.
The contribution margin of the Commercial business segment is:
6-416
178.
Clemmens Corporation has two major business segments: Consumer and Commercial.
Data for the segments and for the company for August appear below:
Sales revenues, Consumer
$390,000
Sales revenues, Commercial
$530,000
Variable expenses, Consumer
$179,000
Variable expenses, Commercial
$265,000
Traceable fixed expenses, Consumer
$59,000
Traceable fixed expenses, Commercial
$64,000
Variable expenses
Contribution margin
Traceable fixed expenses
Segment margin
In addition, common fixed expenses totaled $265,000 and were allocated as follows:
$135,000 to the Consumer business segment and $130,000 to the Commercial business
segment.
A properly constructed segmented income statement in a contribution format would show
that the segment margin of the Consumer business segment is:
6-417
6-418
179.
Clemmens Corporation has two major business segments: Consumer and Commercial.
Data for the segments and for the company for August appear below:
Sales revenues, Consumer
$390,000
Sales revenues, Commercial
$530,000
Variable expenses, Consumer
$179,000
Variable expenses, Commercial
$265,000
Traceable fixed expenses, Consumer
$59,000
Traceable fixed expenses, Commercial
$64,000
Variable expenses
Contribution margin
Traceable fixed expenses
Segment margin
Common fixed expenses
Net operating income
In addition, common fixed expenses totaled $265,000 and were allocated as follows:
$135,000 to the Consumer business segment and $130,000 to the Commercial business
segment.
A properly constructed segmented income statement in a contribution format would show
that the net operating income of the company as a whole is: