Question
In: Accounting
Wilson Inc. has three divisions, Alpha, Beta and Gamma. Following is the income statement for the...
Wilson Inc. has three divisions, Alpha, Beta and Gamma. Following is the income statement for the previous year:
|
Alpha |
Beta |
Gamma |
Total |
||||||||||||||
|
Sales |
$ |
1,000,000 |
$ |
575,000 |
$ |
425,000 |
$ |
2,000,000 |
|||||||||
|
Variable Costs |
400,000 |
345,000 |
300,000 |
1,045,000 |
|||||||||||||
|
Contribution Margin |
600,000 |
230,000 |
125,000 |
955,000 |
|||||||||||||
|
Fixed Costs |
375,000 |
215,625 |
159,375 |
750,000 |
|||||||||||||
|
Profit Margin |
225,000 |
14,375 |
(34,375 |
) |
205,000 |
||||||||||||
Of the fixed costs, $300,000 is for corporate costs and is allocated equally to the three divisions.
- How much does Gamma Division have in direct fixed costs?
- Prepare a table showing the difference between keeping Gamma and dropping Gamma
|
Keep Gamma |
Drop Gamma |
Difference |
|
|
Sales |
|||
|
Variable Expenses |
|||
|
Contribution Margin |
|||
|
Direct Fixed Expenses |
|||
|
Common Fixed Expenses |
|||
|
NOI |
- What is Gamma Division's segment margin?
- What would Wilson's profit margin be if Gamma Division were dropped? What should Wilson do, keep or drop Gamma Division?
SHOW ALL WORK AND CALCULATIONS!
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Alpha, Beta, and Gamma established a partnership. The partnership rules state that income will be distributed...
Alpha, Beta, and Gamma established a partnership. The
partnership rules state that income will be distributed by:1) Alpha
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average capital balances (3) remaining income is distributed 1:2:1
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partner must be contributed back to the partnership
The year begins with capital as follows: Alpha = $50,000, Beta =
$75,000, Gamma = $50,000. During the year, Alpha had draw of
$10,000 taken...
Alpha, Beta, and Gamma established a partnership. The partnership rules state that income will be distributed...
Alpha, Beta, and Gamma established a partnership. The
partnership rules state that income will be distributed by:1) Alpha
receives $12,000 salary (2) each partner receives 7% interest on
average capital balances (3) remaining income is distributed 1:2:1
(Alpha, Beta, Gamma). The amount draw exceeds income for any
partner must be contributed back to the partnership
The year begins with capital as follows: Alpha = $50,000, Beta =
$75,000, Gamma = $50,000. During the year, Alpha had draw of
$10,000 taken...
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Good
Price year 1
Price year 2
Warren
Frank
Alpha
$2.10
$2.25
5
10
Beta
$5.10
$5.80
5
5
Gamma
$3.05
$2.90
10
5
Based on this information, Warren feels like the inflation rate
was __ % and Frank feels like the inflation rate was __ %.
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Power Inc. has two divisions, Windsor and Ridge. Following is the income statement for the past...
Power Inc. has two divisions, Windsor and Ridge. Following is
the income statement for the past month:
Windsor
Ridge
Total
Sales
$
360,000
$
320,000
$
680,000
Variable Costs
280,000
150,000
$
430,000
Contribution Margin
$
80,000
$
170,000
$
250,000
Fixed Costs (allocated)
122,000
128,000
$
250,000
Profit Margin
$
(42,000
)
$
42,000
$
0
What would the impact on operating income be if Power Inc.
discontinued the Windsor Division and could save $24,000 in
allocated fixed costs?
International Printer Machines (IPM) builds three computer printer models: Alpha, Beta, and Gamma. Information for these...
International Printer Machines (IPM) builds three
computer printer models: Alpha, Beta, and Gamma. Information for
these three products is as follows:
Alpha Beta Gamma Total
Selling price per unit $250 $400 $ 1 500
Variable cost per unit $80 $200 $800
Expected unit sales(annual) 12,000 6,000 2,000
20,000
Sales mix 50 % 40% 10% 100%
Total annual fixed costs are $5,000,000. Assume the
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Required:
a) Calculate the weighted average unit...
International Printer Machines (IPM) builds three computer printer models: Alpha, Beta, and Gamma. Information for these...
International Printer Machines (IPM) builds three computer
printer models: Alpha, Beta, and Gamma. Information for these three
products is as follows: Alpha Beta Gamma Total Selling price per
unit $250 $400 $1 500 Variable cost per unit $80 $200 $800 Expected
unit sales (annual) 12,000 6,000 2,000 20,000 Sales mix 50 percent
40 percent 10 percent 100 percent Total annual fixed costs are
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Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated...
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divisions within the same company. The managers of both divisions
are evaluated based on their own division’s return on investment
(ROI). Assume the following information relative to the two
divisions:
Case
1
2
3
4
Alpha
Division:
Capacity in
units
53,000
302,000
108,000
206,000
Number of units
now being sold to
outside customers
53,000
302,000
84,000
206,000
Selling price
per unit to outside
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$
97
$
42
$
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$
45
Variable costs
per unit...
Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated...
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