Question

In: Accounting

1. The Company has two territories--North and South. The territories have the following revenues and expenses:...

1.

The Company has two territories--North and South. The territories have the following revenues and expenses:

North                    South

Sales                                                                          $ 500,000         $ 550,000
Variable costs                                                          200,000    275,000
Traceable fixed costs                                           150,000    180,000
Allocated common corporate costs           135,000        170,000  
Net operating income (loss)                        $    15,000 $ (75,000 )

The management time is thinking about eliminating of the South Division due to its apparent unprofitability. If the South Division were to be eliminated, its traceable fixed costs could be avoided. Total common corporate costs, however, would be unaffected by this decision. Given this information, the elimination of the South Division would result in an overall company net operating income (or loss) of:

2.

The Company makes 40,000 servo motors to be used in the production of its hand held drills. The average cost per motor at this level of activity is:

Direct materials                                               $ 5.60
Direct labor                                                        $ 5.50
Variable manufacturing overhead        $ 4.75
Fixed manufacturing overhead              $ 4.45

An outside supplier recently began producing a comparable motor that could be used in the drill. The price offered to Company for this motor is $18. If Company decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. The annual financial advantage (or disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be:

3. ABC Company produced and sells portable window ABC units. ABC Repair has the annual capacity to manufacture and sell 80,000 ABCs, but is currently only manufacturing and selling 60,000 units. The following data relates to the company's annual operations (at 60,000 units):

                                                                                   Per Unit
Selling price                                                           $ 125
Manufacturing costs:
          Variable                                                          $ 25
          Fixed                                                                $ 40
Selling and administrative costs:
          Variable                                                          $ 10
          Fixed                                                                $ 15

The area would like to purchase 3,000 ABC units from ABC Repair but only if they can get them for $75 each. Variable selling and administrative costs on this special order will drop down to $2 per unit. This special order will not affect the 60,000 regular sales and it will not affect the total fixed costs. The annual financial advantage (or disadvantage) for the company as a result of accepting this special order from area should be:

Solutions

Expert Solution

Note

If you have any queries kindly post a comment, i will solve it earliest.

If you satisfied with my answer, kindly give a thumbs up, it will help to encourage me.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

The Kelsh Company has two divisions--North and South. The divisions have the following revenues and expenses:...
The Kelsh Company has two divisions--North and South. The divisions have the following revenues and expenses: North South Sales $1,060,000     $976,000    Variable Expenses $522,000     $348,000    Traceable Fixed Expenses $356,000     $290,000    Allocated Common Corporate Expenses $256,000     $206,000    Net Operating Income (Loss) $(74,000)    $132,000    Management at Kelsh is pondering the elimination of North Division. If North Division were eliminated, its traceable fixed expenses could be avoided. The total common corporate expenses would be...
A- ABC company has two divisions--Women and Men. The divisions have the following revenues and expenses:...
A- ABC company has two divisions--Women and Men. The divisions have the following revenues and expenses: Women Men Sales $ 500,000 $ 550,000 Variable costs 200,000 275,000 Traceable fixed costs 150,000 180,000 Allocated common corporate costs 135,000 170,000 Net income (loss) $ 15,000 $ (75,000) The management of ABC is considering the elimination of the Men Division. If the Men Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision....
Suppose Stuart Company has the following revenue and expenses for 2017: Revenues of $8,800,000 Cost of...
Suppose Stuart Company has the following revenue and expenses for 2017: Revenues of $8,800,000 Cost of Goods Sold of $2,640,000 Depreciation Expenses of $900,000 Income Taxes of $1,508,000 Interest Expenses of $110,000 Other Expenses of $500,000 Sales, General, & Administrative Expenses of $880,000 Create an income statement with amounts in thousands What is the value of Earnings Before Interest & Taxes? Please specify your answer in the same units as the income statement.
Consider two countries: North and South. In South, banks are required to hold 100% of their...
Consider two countries: North and South. In South, banks are required to hold 100% of their deposits as reserves. In North, the required reserve ratio is 50%. Banks do not hold excess reserves in North or in South. No cash is held by the public in South, while in North, citizens hold $500,000 in cash. Each country has $1 million in bank reserves. Residents buy goods and services and do their banking only in their own country. Neither country has...
David Bash's Landscaping Company has the following list of assets, liabilities, revenues and expenses on December...
David Bash's Landscaping Company has the following list of assets, liabilities, revenues and expenses on December 31, 2016, which is the end of its first year of operations: Common stock $40,400 Accounts payable 5,000 Salary expense 15,000 Repairs expense     2,200 Dividends       10,000 Truck    24,000 Equipment     22,200 Notes payable 12,800 Cash   60,400 Supplies expense 5,400 Service revenue 77,200 Gasoline expense 2,200 The stockholders' equity for David Bash's Landscaping on December 31, 2016 is: A. $106,400 B....
Markey Corporation consists of two divisions, North and South. The North makes Glop, a product that...
Markey Corporation consists of two divisions, North and South. The North makes Glop, a product that can be used in the production of the product that the South division makes and sells. Both divisions are considered profit centers. The following data are available concerning Glop and the two divisions: North South Average units produced 150,000 Average units sold 150,000 Variable manufacturing cost per unit $2 Variable finishing cost per unit $5 Fixed divisional costs $75,000 $125,000 The North Division can...
Question 3 A- ABC company has two divisions--Women and Men. The divisions have the following revenues...
Question 3 A- ABC company has two divisions--Women and Men. The divisions have the following revenues and expenses: Women Men Sales $ 500,000 $ 550,000 Variable costs 200,000 275,000 Traceable fixed costs 150,000 180,000 Allocated common corporate costs 135,000 170,000 Net income (loss) $ 15,000 $ (75,000) The management of ABC is considering the elimination of the Men Division. If the Men Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by...
A company has revenues of $450,000, cost of goods sold of $250,000, and operating expenses of...
A company has revenues of $450,000, cost of goods sold of $250,000, and operating expenses of $150,000. Its average current assets are $200,000 of which $75,000 is inventory and $20,000 are prepaid items. Of its liquid assets, 30 percent is cash and the remainder is accounts receivable. Its average total assets are $500,000 and its average total owners’ equity is $400,000. Seventy-five percent of its liabilities are current. Of the current liabilities, 80 percent is accounts payable. What are the...
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format...
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format segmented income statement as shown: Total Company North South Sales $ 937,500 $ 750,000 $ 187,500 Variable expenses 637,500 600,000 37,500 Contribution margin 300,000 150,000 150,000 Traceable fixed expenses 142,000 71,000 71,000 Segment margin 158,000 $ 79,000 $ 79,000 Common fixed expenses 62,000 Net operating income $ 96,000 Required: 1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in...
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format...
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format segmented income statement as shown: Total Company North South Sales $ 937,500 $ 750,000 $ 187,500 Variable expenses 637,500 600,000 37,500 Contribution margin 300,000 150,000 150,000 Traceable fixed expenses 152,000 76,000 76,000 Segment margin 148,000 $ 74,000 $ 74,000 Common fixed expenses 64,000 Net operating income $ 84,000 Required: 1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT