Question

Prairie Electronics, located in Regina, manufactures three product lines: (1) high-end speakers, (2) personal computers, and (3) handheld devices. For 20X5, it compiled the following budgeted data:

	High-End Speakers		Personal Computers		Handheld Devices		Total
Sales (in units)		400,000		610,000		500,000
Price (per unit)	$	1,500	$	1,310	$	435
Variable costs per unit:
Direct materials	$	430	$	360	$	35
Direct labour		100		80		50
Overhead		60		70		35
Shipping		40		20		10
Sales commissions		50		30		4
Direct fixed costs:
Salaries	$	75,320,000	$	81,650,000	$	53,160,000
Utilities		50,470,000		85,030,000		16,490,000
Depreciation		72,190,000		240,880,000		39,880,000
Common fixed costs:
Corporate salaries							$	44,080,000
Building depreciation								36,780,000
Legal & accounting								54,550,000
Other								14,950,000

Required:

1. & 2.	Prepare a segmented performance report; Compute the contribution margin percentage and segment margin percentage. (Round "Percentage" answers to 1 decimal place, (i.e., 0.123 should be considered as 12.3%).)

             

3-a.	Allocate the common fixed expenses equally to the three segments and prepare a performance report. (Negative amounts should be indicated with a minus sign.)

        

Answer 1

Prairie Electronics
1&2 Segment Performance Report
Particulars		Profit Centers					Company as Whole
	Per Unit	High End speakers	Per Unit	Personal Computers	Per Unit	Handheld devices
Sale Units		400000		610000		500000
Sales	$1,500	$60,00,00,000	$1,310	$79,91,00,000	$435	$21,75,00,000	$1,61,66,00,000
Less: Variable cost
Direct Material	$430	$17,20,00,000	$360	$21,96,00,000	$35	$1,75,00,000
Direct Labour	$100	$4,00,00,000	$80	$4,88,00,000	$50	$2,50,00,000
Overhead	$60	$2,40,00,000	$70	$4,27,00,000	$35	$1,75,00,000
Shipping	$40	$1,60,00,000	$20	$1,22,00,000	$10	$50,00,000
Sales commission	$50	$2,00,00,000	$30	$1,83,00,000	$4	$20,00,000
Total Variable costs	$680	$27,20,00,000	$560	$34,16,00,000	$134	$6,70,00,000	$68,06,00,000
Contribution		$32,80,00,000		$45,75,00,000		$15,05,00,000	$93,60,00,000
Less: Direct Fixed Costs
Salaries		$7,53,20,000		$8,16,50,000		$5,31,60,000
Utlities		$5,04,70,000		$8,50,30,000		$1,64,90,000
Depreciation		$7,21,90,000		$24,08,80,000		$3,98,80,000
Total Fixed cost		$19,79,80,000		$40,75,60,000		$10,95,30,000	$71,50,70,000
Segment Profit		$13,00,20,000		$4,99,40,000		$4,09,70,000	$22,09,30,000
Less: Common fixed cost
Corporate salaries							$4,40,80,000
Building Depreciation							$3,67,80,000
Legal& accounting							$5,45,50,000
Other							$1,49,50,000
Total Common fixed cost							$15,03,60,000
Net Profit							$7,05,70,000
Contribution Margin % (Contribution/Sales)		54.67%		57.25%		69.20%
Segment Margin %(Segment Profit/Sales)		21.67%		6.25%		18.84%

3-a
Particulars		Profit Centers
		High End speakers		Personal Computers		Handheld devices	Total
Segment Profit		$13,00,20,000		$4,99,40,000		$4,09,70,000	$22,09,30,000
Less: Common fixed cost
Allocated portion (150360000/3)		$5,01,20,000		$5,01,20,000		$5,01,20,000	$15,03,60,000
Net Income/(loss)		$7,99,00,000		-$1,80,000		-$91,50,000	$7,05,70,000