Case 12-52 Student Name:
Class:
1.
NORTH AMERICAN INDUSTRIES
Segmented Income Statement by Geographic Areas
For the Fiscal Year Ended April 30, 20×4
Geographic Areas
United States Canada Mexico Unallocated Total
Sales in unitsa
Furniture * * * *
Sports * * * *
Housewares * * * *
Total unit sales * * * *
Revenueb
Furniture * * * *
Sports * * * *
Housewares * * * *
Total revenue * * * *
Variable costsc
Furniture * * * *
Sports * * * *
Housewares * * * *
Total variable costs * * * *
Contribution margin * * * *
Fixed costs
Manufacturing overheadd* * * *
Depreciatione* * * *
Administrative and selling expenses * * * * *
Total fixed costs * * * * *
Operating income (loss) * * * * *
SUPPORTING CALCULATIONS:
aSales in units
Total units x % of Sales = Units Sold
United States
Furniture * * *
Sports * * *
Housewares * * *
Canada
Furniture * * *
Sports * * *
Housewares * * *
Mexico
Furniture * * *
Sports * * *
Housewares * * *
bRevenue
Units Sold Unit Price Revenue
United States
Furniture * * *
Sports * * *
Housewares * * *
Canada
Furniture * * *
Sports * * *
Housewares * * *
Mexico
Furniture * * *
Sports * * *
Housewares * * *
cVariable costs
Variable Variable Total
Production Selling Variable
Units Sold Cost/Unit Cost/Unit Cost
United States
Furniture * * * *
Sports * * * *
Housewares * * * *
Canada
Furniture * * * *
Sports * * * *
Housewares * * * *
Mexico
Furniture * * * *
Sports * * * *
Housewares * * * *
dManufacturing overhead
Total Area Proportion Allocated
Production Variable of Production
Overhead Costs Total Cost
United States * * * *
Canada * * * *
Mexico * * * *
Total * *
eDepreciation Expense
Area Proportion
Total Units of Allocated
Depreciation
Sold Total Depreciation
United States * * * *
Canada * * * *
Mexico * * * *
Total * *
2. Areas where the company’s management should focus its attention in order
to improve corporate profitability include the following:
Case 12-52 Student Name:
Class:
1.
NORTH AMERICAN INDUSTRIES
Segmented Income Statement by Geographic Areas
For the Fiscal Year Ended April 30, 20×4
Geographic Areas
United States Canada Mexico Unallocated Total
Sales in unitsa
Furniture 32,000 8,000 40,000 80,000
Revenueb
Variable costsc
Furniture 512,000$ 128,000$ 640,000$ 1,280,000$
Sports 1,440,000 1,440,000 720,000 3,600,000
Fixed costs
Manufacturing overheadd165,000$ 135,000$ 200,000$ 500,000$
Depreciatione134,400 96,000 169,600 400,000
SUPPORTING CALCULATIONS:
aSales in units
Total units % of Sales Units Sold
United States
Furniture 80,000 0.40 32,000
bRevenue
Units Sold Unit Price Revenue
United States
Furniture 32,000 $16.00 512,000$
Instructor
McGraw-Hill/Irwin
Canada
Furniture 8,000 16.00 128,000
cVariable costs
Variable Variable Total
Production Selling Variable
Units Sold Cost/Unit Cost/Unit Cost
United States
Furniture 32,000 8.00$ 4.00$ 384,000$
Sports 36,000 19.00 5.00 864,000
dManufacturing overhead
Total Area Proportion Allocated
Production Variable of Production
Overhead Costs Total Cost
United States 500,000$ 1,584,000$ 33% 165,000$
eDepreciation Expense
Area Proportion
Total Units of Allocated
Depreciation Sold Total Depreciation
United States 400,000$ 84,000$ 33.6% 134,400$
2. Areas where the company’s management should focus its attention in order
to improve corporate profitability include the following:
fixed costs assigned to the product line result in a loss. Management should investigate:
profitable sales area. In order to improve the profit margin in the Mexicon market,
• The income statement by product line shows that the furniture product line may not
be profitable. The furniture product line does have a positive contribution. However, the
considerably higher than those in other areas.
management should:
— Investigate the selling and administrative expenses in this area as they are
— Consider increasing the sales of product lines other than furniture as this product
line makes the smallest contribution to profit.
costs and improve overall profitability.