Shown above are responsibility income statements for Roberts, Inc., for the mont
ID: 2367732 • Letter: S
Question
Shown above are responsibility income statements for Roberts, Inc., for the month of March.
The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $3,000 per month and is expected to increase the sales of whichever product is advertised by $30,000 per month. Compute the expected increase in the responsibility margin of Division 1 assuming that (1) product A is advertised and (2) product B is advertised.
Product a:
Product b:
Prepare an income statement for Roberts, Inc., by division, under the assumption that in April the monthly sales in Division 2 increase to $170,000 Organize this income statement in the format illustrated above, including columns for percentages.
a.The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $3,000 per month and is expected to increase the sales of whichever product is advertised by $30,000 per month. Compute the expected increase in the responsibility margin of Division 1 assuming that (1) product A is advertised and (2) product B is advertised.
Explanation / Answer
Hi, Please find the solution as follows: Part A: Product A Sales (132000 + 30000) 162000 Variable Cost (162000*.45) 72900 Contribution Margin 89100 Fixed Costs (13860+3000) 16860 Product Responsibility Margin = 72240 Product B Sales (198000 + 30000) 228000 Variable Cost (228000*.70) 159600 Contribution Margin 68400 Fixed Costs (32340+3000) 35340 Product Responsibility Margin = 33060 Part B: Roberts Inc. Sales 500000 100 Variable Cost 249000 49.8 Contribution Margin 251000 50.2 Fixed Costs Traceable to Divisions 141300 28.26 Division Responsibility Margin 109700 21.94 Common Fixed Costs 50000 10 Income From Operations 59700 11.94 Division 1 Sales 330000 100 Variable Cost 198000 60 Contribution Margin 132000 40 Fixed Costs Traceable to Divisions 69300 21 Division Responsibility Margin 62700 19 Division 2 Divison2 Sales 170000 100 Variable Cost 51000 30 Contribution Margin 119000 70 Fixed Costs Traceable to Divisions 72000 42 Division Responsibility Margin 47000 28 Thanks.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.