Question

Segment Analysis McHale Company does business in two customer segments, Retail and Wholesale. The following annual revenue information was determined from the accounting system's invoice information: 20Y5 20Y4 Retail $219,600 $244,000 Wholesale 179,400 156,000 Total revenue $399,000 $400,000 Prepare a horizontal analysis of the segments. Round percentages to one decimal place. Enter negative values as negative numbers. McHale Company Horizontal Analysis For the Years 20Y4 and 20Y5 20Y5 20Y4 Difference - Amount Difference - Percent Retail $219,600 $244,000 $ % Wholesale 179,400 156,000 % Total revenue $399,000 $400,000 $ % Prepare a vertical analysis of the segments. If required, round percentages to one decimal place. McHale Company Vertical Analysis For the Years 20Y4 and 20Y5 20Y5 Amount 20Y5 Percent 20Y4 Amount 20Y4 Percent Retail $219,600 % $244,000 % Wholesale 179,400 % 156,000 % Total revenue $399,000 % $400,000 % Submit AnswerTry Another Version

Answer 1

McHale Company

Horizontal analysis

For the years 2004 and 2005

Segment	2005	2004	Increase/Decrease ($)	%
Retail	219,600	244,000	- 24,400	- 10%
Wholesale	179,400	156,000	23,400	15%
Total	399,000	400,000	- 1,000	- 0.25%

Working note:

(i) Increase/Decrease = Amount of item in current year - Amount of item in base year

Decrease in retail = 219,600 - 244,000

= - $24,400

Increase in wholesale = 179,400 - 156,000

= $23,400

Decrease in total = 399,000 - 400,000

= - $1,000

(ii) Percentage change = (Increase or decrease/Amount of item in previous year) x 100

% Decrease in retail = (-24,400/244,000) x 100

= -10%

% Increase in wholesale = (23,400/156,000) x 100

= 15%

% Decrease in total = (-1,000/400,000) x 100

= -0.25%

McHale Company

Vertical Analysis

For the years 2004 and 2005

Segment	2005	%	2004	%
Retail	219,600	55%	244,000	61%
Wholesale	179,400	45%	156,000	39%
Total	399,000	100%	400,000	100%

Working notes:

Calculation of % in 2005

Retail % = (219,600/399,000) x 100

= 55%

Wholesale % = (179,400/399,000) x 100

= 45%

Calculation of % in 2004

Retail % = (244,000/400,000) x 100

= 61%

Wholesale % = (156,000/400,000) x 100

= 39%