Supplement Solutions Chapter 12 ACCT 210

Supplement Solutions Chapter 12 ACCT 210 - 12 - 2 GIVEN...

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12 - 2 Total Houston Dallas Sales 750,000 $ 100.0% 150,000 $ 100.0% 600,000 $ 100.0% Less Variable Costs: 405,000 $ 54.0% 45,000 $ 30.0% 360,000 $ 60.0% Contribution Margin 345,000 $ 46.0% 105,000 $ 70.0% 240,000 $ 40.0% Less: Traceable Fixed Expenses 168,000 $ 22.4% 78,000 $ 52.0% 90,000 $ 15.0% Segment Margin 177,000 $ 23.6% 27,000 $ 18.0% 150,000 $ 25.0% Less Common Expenses: 120,000 $ 16.0% Net Income 57,000 $ 7.6% Segmented Contribution Statement for Marple Associates GIVEN
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12:2a Total Houston Dallas Sales 825,000 $ 100.0% 150,000 $ 100.0% 675,000 $ 100.0% Less Variable Costs: 450,000 $ 54.5% 45,000 $ 30.0% 405,000 $ 60.0% Contribution Margin 375,000 $ 45.5% 105,000 $ 70.0% 270,000 $ 40.0% Less: Traceable Fixed Expenses 168,000 $ 20.4% 78,000 $ 52.0% 90,000 $ 13.3% Segment Margin 207,000 $ 25.1% 27,000 $ 18.0% 180,000 $ 26.7% Less Common Expenses: 120,000 $ 14.5% Net Income 87,000 $ 10.5% Segmented Contribution Statement for Marple Associates A Sales increase of $75,000 for the Dallas Segment B, affects that segment’s contribution to overall company profits. Company total Net Income grows by $30,000 (from $57,000) to $87,000.
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Total Houston Dallas Sales 825,000 $ 100.0% 150,000 $ 100.0% 675,000 $ 100.0% Less Variable Costs: 450,000 $ 54.5% 45,000 $ 30.0% 405,000 $ 60.0% Contribution Margin 375,000 $ 45.5% 105,000 $ 70.0% 270,000 $ 40.0% Less: Traceable Fixed Expenses 168,000 $ 20.4% 78,000 $ 52.0% 90,000 $ 13.3% Segment Margin 207,000 $ 25.1% 27,000 $ 18.0% 180,000 $ 26.7% Less Common Expenses: 120,000 $ 14.5% Net Income 87,000 $ 10.5% Segmented Contribution Statement for Marple Associates At this point you should be able to run these numbers on the margin. That is to say, you should recognize that (without other information to the contrary) greater sales in Dallas will increase the Dallas Contribution Margin by $30,000 which is equal to the new sales ($75,000) times the segment CM ratio of 40%. (Note this is not the same as the segment margin ratio) Notice too that all of the numbers in red have changed due to the increased sales assumption. 12:2a
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Total Dallas Sales 800,000 $ 100.0% 200,000 $ 100.0% 600,000 $ 100.0% Less Variable Costs: 420,000 $ 52.5% 60,000 $ 30.0% 360,000 $ 60.0% Contribution Margin 380,000 $ 47.5% 140,000 $ 70.0% 240,000 $ 40.0% Less: Traceable Fixed Expenses 168,000 $ 21.0% 78,000 $ 39.0% 90,000 $ 15.0% Segment Margin 212,000 $ 26.5% 62,000 $ 31.0% 150,000 $ 25.0% Less Common Expenses: 120,000 $ 15.0% Net Income 92,000 $ 11.5% Segmented Contribution Statement for Marple Associates This time the assumption states that Houston sales increase by $50,000 next year. Assume too that Dallas is unchanged and that fixed costs remain the same. Segment Margin increases by $35,000 (70% of the new sales) from $27,000 to $62,000. Without any fixed cost changes, the company-wide bottom line also increases by $35,000 Notice too that all of the numbers in red have changed due to the increased sales assumption. Increase of $50,000 Increase by $35,000 12:2a
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The Segment Margin ratio changes because the Traceable Fixed Costs for the segment are unchanged while the total Sales and total Contribution Margin increases. 12:2b
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Dallas Construction Landscaping Sales 600,000 $ 100.0% 400,000 $ 100.0% 200,000 $ 100.0% Less Variable Costs: 360,000 $ 60.0% 260,000 $ 65.0% 100,000 $ 50.0% Contribution Margin 240,000 $ 40.0% 140,000 $ 35.0% 100,000 $ 50.0% Less: Traceable Fixed Expenses 72,000 $ 12.0% 20,000 $ 5.0% 52,000 $ 26.0% Segment Margin 168,000 $ 28.0% 120,000 $ 30.0% 48,000 $ 24.0% Less Common Expenses: 18,000 $ 3.0% Net Income 150,000 $ 25.0% Segmented Contribution Statement for Marple Associates 12:3.a Given Notice that the Dallas Total column is identical to that listed in the Marple Associates statement
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Dallas Construction Landscaping Sales 670,000 $ 100.0% 470,000 $ 100.0% 200,000 $ 100.0% Less Variable Costs: 405,500 $ 60.5% 305,500 $ 65.0% 100,000 $ 50.0% Contribution Margin 264,500 $ 39.5% 164,500 $ 35.0% 100,000 $ 50.0% Less: Traceable Fixed Expenses 80,000 $ 11.9% 28,000 $ 6.0% 52,000 $ 26.0% Segment Margin 184,500 $ 27.5% 136,500 $ 29.0% 48,000 $ 24.0% Less Common Expenses: 18,000 $ 2.7% Net Income 166,500 $ 24.9% Segmented Contribution Statement for Marple Associates An $8,000 increase in “Construction
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This homework help was uploaded on 04/02/2008 for the course ACCT 210 taught by Professor Blanchard during the Spring '08 term at University of Arizona- Tucson.

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Supplement Solutions Chapter 12 ACCT 210 - 12 - 2 GIVEN...

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