VI test 2 - 23000 and the profitability can also be found...

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Segmemtal reporting Contribution statement for the Company Sales 900000 100 Less:variable cost 408000 45.3 contribution 492000 54.7 Less:fixed cost 465000 51.7 Profit 27000 3 Contribution margin statement on the basis of sales territories Central Percentage Eastern Percentage sales 400000 100 500000 100 Less:variable cost 208000 52 200000 40 contribution 192000 48 300000 60 Less:fixed cost 160000 40.0 130000 26 Profit 32000 8.0 170000 34 Profit 27000 Total fixed cost 465000 central 160000 Eastern 130000 Common fixed cost 175000 can be divided equally to both departments 87500 Profitability of the territories can also be found out by allocating the common fixed costs equally to the territories Contribution margin statement on the basis of products Haws Percentage Pasws Percentage sales 100000 100 300000 100 Less:variable cost 25000 25 183000 61 contribution 75000 75 117000 39 Less:fixed cost 60000 60.0 54000 18.0 Profit 15000 15.0 63000 21.0 Profit 32000 Total fixed cost 160000 Haws 60000 Paws 54000 Common fixed cost 46000 46000 can be divided equally to both departments
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Unformatted text preview: 23000 and the profitability can also be found out. Review of segments 1 Eventhougth the company has earned a total profit of 27000, the profit earned by Eastern territory is 170000 and the profit is and the profit is only 32000 in the central territory. Therefore, the management needs to take steps to improve the profitability of central territory. 2 While reviewing central territory, the major profit is from the product Paws (i.e., 63000) as against the profit of 15000 from Haws. Therefore, steps need to be taken to improve the profitability of eastern division either by concentrating more on Paws or any other measures to improve the sales of these two products by sales promotion or advertsing. . Then only, it can be possible for the company to improve the overall profitability of the organisation....
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