ACCT CH6

Total Company: Sales: 600000 Variable Expenses: 384000 Contribution Margin: 216000 Traceable Fixed Expenses: 152000 Segment Margin: 64000 Common Fixed Expenses: 34000 Net Operating Income: 30000 Store P: Sales: 200000 Variable Expenses: 144000 Contribution Margin: 56000 Traceable Fixed Expenses: 42000 Segment Margin: 14000 Store Q: Sales: 400000 Variable Expenses: 240000 Contribution Margin: 160000 Traceable Fixed Expenses: 110000 Segment Margin: 50000 The marketing department believes that a promotional campaign at Store P costing $5,000 will increase sales by $15,000. If the campaign is adopted, overall company net operating income should: decrease by $5,800 increase by $5,800 decrease by $800 increase by $10,000

decrease by $800 (store P sales 200000 store P var exp 144000 cm 56000 cm ratio 0.28 old segment margin: 14000 new segment margin: 13200)

Total Company: Sales: 404000 Variable Expenses: 152130 Contribution Margin: 251870 Traceable Fixed Expenses: 192000 Segment Margin: 59870 Common Fixed Expenses: 52520 Net Operating Income: 7350 Division M: Sales: 181000 Variable Expenses: 65160 Contribution Margin: 115840 Traceable Fixed Expenses: 87000 Segment Margin: 28840 Common Fixed Expenses: 23530 Net Operating Income: 5310 Division N: Sales: 223000 Variable Expenses: 86970 Contribution Margin: 136030 Traceable Fixed Expenses: 105000 Segment Margin: 31030 Common Fixed Expenses: 28990 Net Operating Income: 2040 The break-even in sales dollars for the division N is closest to: $392,211 $219,656 $258,230 $172,131

$172,131; 172131 (Trace Fc / CM Ratio)

Gore Corporation has two divisions: the Business Products Division and the Export Products Division. The Business Products Division's divisional segment margin is $55,700 and the Export Products Division's divisional segment margin is $70,600. The total amount of common fixed expenses not traceable to the individual divisions is $107,400. What is the company's net operating income? $126,300 $233,700 <$126,300> $18,900

$18,900; 18900 (Total Segment Margin: 126300 Common Fixed Expenses: 107400 Net Operating Income: 18900)

Max, Inc., has two divisions, South Division and North Division. South Division's sales, contribution margin ratio, and traceable fixed expenses are $500,000, 60%, and $100,000 respectively. What is the segment margin for the South Division? $400,000 $300,000 $200,000 $100,000

$200,000; 200000

Sugiki Corporation has two divisions: the Alpha Division and the Delta Division. The Alpha Division has sales of $820,000, variable expenses of $369,000, and traceable fixed expenses of $347,300. The Delta Division has sales of $460,000, variable expenses of $294,400, and traceable fixed expenses of $134,100. The total amount of common fixed expenses not traceable to the individual divisions is $97,300. What is the company's net operating income? $135,200 $616,600 $37,900 $519,300

$37,900 (alpha sales 820000 alpha variable exp 369000 alpha trace fixed 347300 segment margin: 103700 Delta sales 460000 Delta variable exp 294400 Delta traceable exp 134100 segment margin: 31500 Total segment Margin: 135200 total common fc 97300 net operating income: 37900)

Bovine Corporation has two divisions: televisions and mobile phones. The mobile phone division has a contribution margin of $600,000. The company's common fixed costs and total traceable fixed costs are $100,000 and $500,000 respectively. What is the segment margin of the mobile phone division, assuming the traceable fixed costs of the television division are $300,000? $200,000 $100,000 $300,000 $400,000

$400,000; 400000

Total Company: Sales: 668000 Variable Expenses: 220530 Contribution Margin: 447470 Traceable Fixed Expenses: 335000 Segment Margin: 112470 Common Fixed Expenses: 73480 Net Operating Income: 38990 Domestic: Sales: 347000 Variable Expenses: 72870 Contribution Margin: 274130 Traceable Fixed Expenses: 201000 Segment Margin: 73480 Foreign: Sales: 321000 Variable Expenses: 147660 Contribution Margin: 173340 Traceable Fixed Expenses: 134000 Segment Margin: 39340 The break-even in sales dollars for the company as a whole is closest to: $609,794 $502,579 $107,216 $436,424

$609,794; 609794 ((Trace Fix + Common Fix) / CM Ratio)

When using data from a segmented income statement, the dollar sales for the company to break even overall is equal to: (Non-traceable fixed expenses + Common fixed expenses) divided by Overall CM Ratio Traceable fixed expenses divided by Overall CM Ratio (Allocated fixed expenses + Traceable fixed expenses) divided by Overall CM Ratio (Traceable fixed expenses + Common fixed expenses) divided by Overall CM Ratio

(Traceable fixed expenses + Common fixed expenses) divided by Overall CM Ratio

East: Sales: 324000 Variable Expenses: 93960 Traceable Fixed Expenses: 156000 West: Sales: 149000 Variable Expenses: 34270 Traceable Fixed Expenses: 90000 The company's common fixed expenses total $47,300. If the company operates at exactly the break-even sales of the East and West division, what would be the company's overall net operating income? ($47,300) $51,470 $0 ($293,300)

-47300 (Profit = (CM ratio x Sales) - Common Fixed Expenses - Total Traceable Fixed Expenses If each division resulting in 0 profit, then the additional fixed cost of 47300 would produce a loss)

A true common fixed cost would disappear if a segment was entirely eliminated. True False

False

Which of the following is an example of a common fixed cost? Salary of the Fritos product manager at PepsiCo. Salary of the CEO of Apple, Inc. Maintenance cost for the building in which Boeing 747's are assembled for Boeing, Inc. Advertising campaigns of the computer division of Sony Corporation.

Salary of the CEO of Apple, Inc.

When using data from a segmented income statement, the dollar sales for a segment to break even is equal to: Traceable fixed expenses divided by unit CM Traceable fixed expenses divided by Segment CM ratio Common fixed expenses divided by segment CM ratio Common fixed expenses divided by unit CM

Traceable fixed expenses divided by Segment CM ratio

In an income statement segmented by product line, a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be: classified as a common fixed expense and not allocated. allocated to the product lines on the basis of segment margin. classified as a traceable fixed expense and not allocated. allocated to the product lines on the basis of sales dollars.

classified as a common fixed expense and not allocated.

Total Company: Sales: 150000 Variable Expenses: 60000 Contribution Margin: 90000 Traceable Fixed Expenses: 60000 Segment Margin: 30000 Common Fixed Expenses: 15000 Net Operating Income: 15000 Store G: Sales: 60000 Variable Expenses: 30000 Contribution Margin: 30000 Traceable Fixed Expenses: 15000 Segment Margin: 15000 Store H: Sales: 90000 Variable Expenses: 30000 Contribution Margin: 60000 Traceable Fixed Expenses: 45000 Segment Margin: 15000 If Store G sales increase by $40,000 with no change in fixed costs, the overall company net operating income should: increase by $20,000 increase by $4,000 increase by $24,000 increase by $8,000

increase by $20,000 (store g cm ratio: 0.5 cm margin after sales inc 40000 50000 resulting segment margin: 35000 inc/dec overall: 20000)

The use of absorption costing for segmented income statements results in: omission of upstream and downstream costs. failure to trace costs directly. inappropriate use of allocation base. arbitrary division of common costs among segments.

omission of upstream and downstream costs.