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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:
6-222
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
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:
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:
6-225
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:
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
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:
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
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:
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
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:
180. Data for March for Lazarus Corporation and its two major business segments, North and
South, appear below:
Sales revenues, North $380,000
Variable expenses, North $213,000
Traceable fixed expenses, North $65,000
Sales revenues, South $230,000
Variable expenses, South $104,000
Traceable fixed expenses, South $25,000
In addition, common fixed expenses totaled $156,000 and were allocated as follows: $84,000 to
the North business segment and $72,000 to the South business segment.
The contribution margin of the South business segment is:
181. Data for March for Lazarus Corporation and its two major business segments, North and
South, appear below:
Sales revenues, North $380,000
Variable expenses, North $213,000
Traceable fixed expenses, North $65,000
Sales revenues, South $230,000
Variable expenses, South $104,000
Traceable fixed expenses, South $25,000
In addition, common fixed expenses totaled $156,000 and were allocated as follows: $84,000 to
the North business segment and $72,000 to the South business segment.
A properly constructed segmented income statement in a contribution format would show that
the segment margin of the North business segment is:
182. Data for March for Lazarus Corporation and its two major business segments, North and
South, appear below:
Sales revenues, North $380,000
Variable expenses, North $213,000
Traceable fixed expenses, North $65,000
Sales revenues, South $230,000
Variable expenses, South $104,000
Traceable fixed expenses, South $25,000
In addition, common fixed expenses totaled $156,000 and were allocated as follows: $84,000 to
the North business segment and $72,000 to the South 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:
183. Rollison Corporation has two divisions: Retail Division and Wholesale Division. The
following data are for the most recent operating period:
Total Company Retail Division Wholesale Division
Sales $545,000 $278,000 $267,000
Variable expenses $146,820 $66,720 $80,100
Traceable fixed expenses $267,000 $152,000 $115,000
The common fixed expenses of the company are $76,300.
The Retail Division's break-even sales in dollars is closest to:
184. Rollison Corporation has two divisions: Retail Division and Wholesale Division. The
following data are for the most recent operating period:
Total Company Retail Division Wholesale Division
Sales $545,000 $278,000 $267,000
Variable expenses $146,820 $66,720 $80,100
Traceable fixed expenses $267,000 $152,000 $115,000
The common fixed expenses of the company are $76,300.
The Wholesale Division's break-even sales in dollars is closest to:
185. Rollison Corporation has two divisions: Retail Division and Wholesale Division. The
following data are for the most recent operating period:
Total Company Retail Division Wholesale Division
Sales $545,000 $278,000 $267,000
Variable expenses $146,820 $66,720 $80,100
Traceable fixed expenses $267,000 $152,000 $115,000
The common fixed expenses of the company are $76,300.
The company's overall break-even sales in dollars is closest to:
186. Sosinski Corporation has two divisions: Domestic Division and Foreign Division. The
following data are for the most recent operating period:
Domestic
Division Foreign
Division
Sales $300,000 $261,000
Variable expenses $129,000 $83,520
Traceable fixed expenses $102,000 $109,000
Common fixed expense $42,000 $36,540
The common fixed expenses have been allocated to the divisions on the basis of sales.
The Domestic Division's break-even sales is closest to:
187. Sosinski Corporation has two divisions: Domestic Division and Foreign Division. The
following data are for the most recent operating period:
Domestic
Division Foreign
Division
Sales $300,000 $261,000
Variable expenses $129,000 $83,520
Traceable fixed expenses $102,000 $109,000
Common fixed expense $42,000 $36,540
The common fixed expenses have been allocated to the divisions on the basis of sales.
The Foreign Division's break-even sales is closest to:
188. Sosinski Corporation has two divisions: Domestic Division and Foreign Division. The
following data are for the most recent operating period:
Domestic
Division Foreign
Division
Sales $300,000 $261,000
Variable expenses $129,000 $83,520
Traceable fixed expenses $102,000 $109,000
Common fixed expense $42,000 $36,540
The common fixed expenses have been allocated to the divisions on the basis of sales.
The company's overall break-even sales is closest to:
