221_Solutions_Chap_13_Sp_07

221_Solutions_Chap_13_Sp_07 - E13-20 a Script Inc Territory...

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E13-20 a. Script, Inc. Territory and Company Income Statements For the Month of September Company Florida Alabama Totals Sales: Pens $15,000 $ 10,000 $25,000 Pencils 9,000 21,000 30,000 Total sales $24,000 $31,000 $55,000 Variable costs: Pens (10/25 × sales dollars) $ 6,000 $ 4,000 $ 10,000 Pencils (12/30 × sales dollars) 3,600 8,400 12,000 Total (9,600 ) (12,400 ) (22,000 ) Contribution margin $14,400 $18,600 $33,000 Direct fixed expenses (2,000 ) (3,000 ) (5,000 ) Territory margin $12,400 $15,600 $28,000 Common fixed expenses: Pens $ 9,000 Pencils 7,000 Home office 1,000 Total (17,000 ) Net income $ 11,000 b. Because the allocation base changes and different expenses are related to separate bases, the direct expenses change with the type of segment base used. In this problem, the segment base changed from products to territories.
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E13-22 a. SP Financial Services Computation of Gross Profit For the Month of April Tax Financial Company Consultants Consultants Totals Revenues: External $400,000 $700,000 $1,100,000 Internal* 90,000 30,000 0 Total $490,000 $730,000 $1,100,000 Costs: Incurred $220,000 $480,000 $ 700,000 Transferred-in** 30,000 90,000 0 Total (250,000 ) (570,000 ) (700,000 ) Gross profit $240,000 $160,000 $ 400,000 * Tax: 3,000 hrs. × $30 Financial: 1,200 hrs. × $25 ** Revenue for one becomes expense for the other. b. SP Financial Services Computation of Gross Profit For the Month of April Tax Financial Company Consultants Consultants Totals Revenues: External $400,000 $700,000 $1,100,000 Internal* 90,000 36,000 0 Total $490,000 $736,000 $1,100,000 Costs: Incurred $220,000 $480,000 $ 700,000 Transferred-in** 36,000 90,000 0 Total (256,000 ) (570,000 ) (700,000 ) Gross profit $234,000 $166,000 $ 400,000 * Tax: 3,000 hrs. × $30 Financial: 1,200 hrs. × $30 **Revenue for one becomes expense for the other.
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c. SP Financial Services Computation of Gross Profit For the Month of April Tax Financial Company Consultants Consultants Totals Revenues: External $400,000 $700,000 $1,100,000 Internal* 45,000 0 0 Total $445,000 $700,000 $1,100,000 Costs: Incurred $220,000 $480,000 $ 700,000 Transferred-in* 0 45,000 0 Total (220,000 ) (525,000 ) (700,000 ) Gross profit $225,000 $175,000 $ 400,000 *Transferred revenue and cost are (3,000 1,200) × $25. The manager of SP Financial Services favors this procedure; but unless Tax always
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221_Solutions_Chap_13_Sp_07 - E13-20 a Script Inc Territory...

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