Question

kneeland corporation has two divisions: grocery division and convenience division. the following ... Question: Kneeland Corporation has two divisions: Grocery Division and Convenience Division. The following ... (1 bookmark) Kneeland Corporation has two divisions: Grocery Division and Convenience Division. The following report is for the most recent operating period: Total Company Grocery Division Convenience Division Sales $ 427,000 $ 321,000 $ 106,000 Variable expenses 119,380 70,620 48,760 Contribution margin 307,620 250,380 57,240 Traceable fixed expenses 239,000 194,000 45,000 Segment margin 68,620 56,380 12,240 Common fixed expense 46,970 35,310 11,660 Net operating income $ 21,650 $ 21,070 $ 580 The common fixed expenses have been allocated to the divisions on the basis of sales.

Required: d. What would be the company's overall net operating income if the company operated at its two division's break-even points? ***in detail please

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Answer 1

SEGMENT-WISE INCOME STATEMENT
				TOTAL	GROCERY	CONVENIENCE
				AMOUNT $	AMOUNT $	AMOUNT $
Sales Revenue				427,000	321,000	106,000
Less: Variable expense				119,380	70,620	48,760
Contribution Margin				307,620	250,380	57,240
Less: Traceable Fixed cost				239,000	194,000	45,000
SEGMENT MARGIN				68,620	56,380	12,240
Less: Common Fixed cost				46,970
Net Operating Income				21,650
CM ratio of each division (Contribution/ sales*100)
Grocery: (250380/321000*100): 78%
Convenience: (57240/106000*100): 54%
Break even for Division: Traceable Fixed cost/ CM ratio
Grocery: 194,000/78% = $248718
Convenience: 45000/54% = $83,333
Total sales for company(when division at break even):					332051
	(248718+83333)
Total contribution for the company					239000
	(traceable fixed cost recovered)
Total Fixed cost for t he company					285970
	(Traceable and common Fixed cost)
Net Operating loss					-46970