Question

Answer all these questions with the right answer letter next to each question number

49-Valley Inc. has three divisions, Almond, Grover and Oak. Following is the income statement for the previous year:

	Almond			Grover			Oak				Total
Sales	$	487,000		$	271,500			$	226,000		$	984,500
Variable Costs		183,000			124,700				100,300			408,000
Contribution Margin		304,000			146,800				125,700			576,500
Fixed Costs		257,000			156,250				103,750			517,000
Profit Margin	$	47,000		$	(9,450	)		$	21,950		$	59,500

Of the fixed costs, $309,000 is for corporate costs and is allocated equally to the three divisions.

a. How much does Grover Division have in direct fixed costs?

b. What is Grover Division’s segment margin?

c. What would Valley’s profit margin be if Grover Division were dropped?

50-Center Company currently produces three products from a joint process. The joint process has total costs of $504,000 per month. All three products, A, B & C, are immediately saleable as they come out of the joint process. Alternatively, any of the products could continue on with additional processing and be sold as a more complete product. The following information is available:

	Units		Immediate Sales Price				Later Sales Price				Unit Cost of Further Processing
A	4,250		$	17			$	18			$	2.00
B	17,750		$	21			$	24			$	2.50
C	10,250		$	26			$	30			$	3.00

a-1. Should Product A be sold immediately or sold after processing further?

• Sell Now

• Sell Later

a-2. How much will the decision affect profit?

b-1. Should Product B be sold immediately or sold after processing further?

• Sell Now

• Sell Later

b-2. How much will the decision affect profit?

c-1. Should Product C be sold immediately or sold after processing further?

• Sell Now

• Sell Later

c-2. How much will the decision affect profit?

Answer 1

Answer is given below with working

Grover Direct fixed cost is $53,250