Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,070,000 1,273,000 2,797,000 2,220,000 $ 577,000 Financial (disadvantage) Department Hardware $ 3,060,000 870,000 2,190,000 1,370,000 $ 820,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? A study indicates that $372,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 18% decrease in the sales of the Hardware Department. Linens $ 1,010,000 403,000 607,000 850,000 $ (243,000)

Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,070,000 1,273,000 2,797,000 2,220,000 $ 577,000 Financial (disadvantage) Department Hardware $ 3,060,000 870,000 2,190,000 1,370,000 $ 820,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? A study indicates that $372,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 18% decrease in the sales of the Hardware Department. Linens $ 1,010,000 403,000 607,000 850,000 $ (243,000)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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k ces Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,070,000 1,362,000 2,708,000 2,300,000 $ 408,000 Show All Items Department Hardware $ 3,040,000 952,000 2,088,000 1,410,000 $ 678,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? A study indicates $378,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 12% decrease in the sales of the Hardware Department. Linens $ 1,030,000 410,000 620,000 890,000 $ (270,000)
ducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fmycstate.cincinnatistate.edu %252Fweba Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Sales Variable expenses as a percentage of sales Traceable fixed expenses In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: $ 1,603,000 673,540 929,460 1,022,000 $ (92,540) Req 1 Req 2A East $ 403,000 Complete this question by entering your answers in the tabs below. Req 2B 58% $ 251,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly…
Complete each of the following contribution format income statements by supplying the missing numbers. a. b. c. d. Sales revenue $ $485,168 $ $686,356 Variable expenses 232,804 102,728 Contribution margin 130,532 171,860 430,808 Fixed expenses 87,912 146,396 Operating income 21,597 Income taxes 25,184 21,532 60,859 Net income $15,118 $ $64,596 $182,577
Contribution Margin and Contribution Margin Ratio For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions): Sales Food and packaging Payroll Occupancy (rent, depreciation, etc.) General, selling, and admin. expenses Other expense Total expenses Operating income (loss) $4,310 3,800 4,190 2,200 290 % $14,500 (14,790) $(290) Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, a. What is McDonald's contribution margin? Enter your answer in million, rounded to one decimal place. million b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place. and nistrative expenses. c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs?
Consider the following Information for the business Harry's Vintage Records. Actuals from the year ended 31st December 2021; Total Sales Revenue Total Fixed Costs $380,000 $90,000 0.20 Contribution Margin Ratio Calculate Harry's profit or loss in 2021 Select one: O a. (13,000) O b. 11,000 c. 12,000 d. (14,000)
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,180,000 1,248,000 2,932,000 2,180,000 $ 752,000 Answer is complete but not entirely correct. $ (52,100) Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage) Department Hardware $ 3,100,000 830,000 2,270,000 1,380,000 $ 890,000 A study indicates that $378,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 12% decrease in the sales of the Hardware Department. Linens $ 1,080,000 418,000 662,000 800,000 $ (138,000)
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $4,180,000. 1,365,000 2,815,000 2,230,000 $ 585,000 Department Hardware $ 3,080,000 963,000 2,117,000 1,340,000 $ 777,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Linens $ 1,100,000 402,000 698,000 890,000 $(192,000) A study indicates that $378,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 13% decrease in the sales of the Hardware Department.
igmeniMalh.do?invoker=&takeAssignmentSessionLocator=&inprogress%3Dfalse Show Me How Print Item eBook Contribution Margin and Contribution Margin Ratio For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales $15,295.0 Food and packaging $(4,896.9) Payroll (4,134.2) Occupancy (rent, depreciation, etc.) (3,667.7) General, selling, and administrative expenses (2,384.5) $(15,083.3) Operating income $211.7 Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin? Round to the nearest tenth of a million (one decimal place). million b. What is McDonald's contribution margin ratio? Round to one decimal place. % c. How much would operating income increase if same-store sales increased by $800 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest…
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format. income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,300,000 1,347,000 2,953,000 2,200,000 $ 753,000 Hardware $ 3,160,000 Department Linens $ 1,140,000 404,000 736,000 850,000 $ 867,000 $ (114,000) 943,000 2,217,000 1,350,000 A study indicates $379,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 16% decrease in the sales of the Hardware Department Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage) $ (610,760)
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A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950
Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Additional data concerning the usage of the activities by the various customers are also provided: Required: (Note: Round answers to two decimal places.) 1. Calculate a cost per account per year by dividing the total cost of processing and maintaining checking accounts by the total number of accounts. What is the average fee per month that the bank should charge to cover the costs incurred because of checking accounts? 2. Calculate a cost per account by customer category by using activity rates. 3. Currently, the bank offers free checking to all of its customers. The interest revenues average 90 per account; however, the interest revenues earned per account by category are 80, 100, and 165 for the low-, medium-, and high-balance accounts, respectively. Calculate the average profit per account (average revenue minus average cost from Requirement 1). Then calculate the profit per account by using the revenue per customer type and the unit cost per customer type calculated in Requirement 2. 4. CONCEPTUAL CONNECTION After the analysis in Requirement 3, a vice president recommended eliminating the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than made up for the loss through cross-sales. He presented a survey that showed that 50% of the customers would switch banks if a checking fee were imposed. Explain how you could verify the presidents argument by using ABC.