ACFI-350 MANAGERIAL ACCOUNTING EXCEL ASSIGNMENT Professor C. Donchess A contribu
ID: 2438731 • Letter: A
Question
ACFI-350 MANAGERIAL ACCOUNTING EXCEL ASSIGNMENT Professor C. Donchess A contribution format income statement for the most recent year for Big Bear Consumer Electronics Inc. is shown below. Total Department AM/FM radios HD radios $320,000 | 100% | | $270,000 | 100% | 80%| 100% sso,0001 20,000| Sales Less variable expenses Contribution Margin Less Traceable 236,000| 84,000 | 15.000 | 69,000 74%| | 216,000| 60% 26% S% 22 a 54,00020%30,000 10.000 | 4% | 5.000 | 10% Fixed Expenses segmen t Marginl | Less Common $44 000 10th S25 000 501 40,000 | 13% Fixed Expenses Net Operating Income PROBLEM BACKGROUND: Shortly after graduating with a business degree from Bridgewater State University, you are hired as an assistant to the District Manager of a national consumer electronics chain. During your first day on the job, you attend a meeting regarding product lines carried by the chain. You learn about a fairly new innovation called HD (high definition) radio. This product allows consumers to listen to not only traditional AM and FM bands, but also to the newly created HD frequencies that most local radio stations are broadcasting free of charge to listeners on adjacent frequencies that previously were unused. Unlike satellite radio, this service requires no subscription charges. Consumers who have heard HD radio tell you that AM-HD broadcasts sound like FM and FM-HD broadcasts sound like CD quality! Due to improved manufacturing technologies, the cost to manufacture HD radios has dropped dramatically.Explanation / Answer
A
ORIGINAL DATA
TOTALDEPARTMENT
(IN $)
AM/FM RADIO
(IN $)
HD RADIO
(IN $)
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
SALE
320000
100
270000
100
50000
100
LESS VARIABLE COST
236000
74
216000
80
20000
40
CONTRIBUTION MARGINAL
84000
26
54000
20
30000
60
LESS TRACEABLE FIXED EXPENSES
15000
5
10000
4
5000
10
SEGMENT MARGIN
69000
22
44000
16
25000
50
LESS COMMON FIXED EXPENSES
40000
13
NET OPERATING INCOME
29000
9
ADVERTISEMENT EXPENSES SPENT ON AM/FM RADIO
TOTALDEPARTMENT
(IN $)
AM/FM RADIO
(IN $)
HD RADIO
(IN $)
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
SALE
370000
100
320000
100
50000
100
LESS VARIABLE COST
276000
74
256000
80
20000
40
CONTRIBUTION MARGINAL
94000
26
64000
20
30000
60
LESS TRACEABLE FIXED EXPENSES
15000
5
10000
3
5000
10
ADVERTISEMENT EXPENSES
10000
10000
3
SEGMENT MARGIN
69000
19
44000
14
25000
50
LESS COMMON FIXED EXPENSES
40000
11
NET OPERATING INCOME
29000
8
ADVERTISEMENT EXPENSES SPENT ON HD RADIO
TOTALDEPARTMENT
(IN $)
AM/FM RADIO
(IN $)
HD RADIO
(IN $)
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
SALE
365000
100
270000
100
95000
100
LESS VARIABLE COST
254000
74
216000
80
38000
40
CONTRIBUTION MARGINAL
111000
26
54000
20
57000
60
LESS TRACEABLE FIXED EXPENSES
15000
5
10000
4
5000
5
ADVERTISEMENT EXPENSES
10000
10000
11
SEGMENT MARGIN
86000
22
34000
13
42000
44
LESS COMMON FIXED EXPENSES
40000
11
NET OPERATING INCOME
46000
13
B.
According to the above working we should spent advertising expenses in HD Radio as total segment profit increases. If we will spent it in AM/FM Radio total segment profit will decrease. so it is advisable to spent advertisement expenses in HD Radio.
C.
i. Now a days Television is an important media for advertisement.
ii. Also avertising through mawebsite can also be done as many people use internet now a days.
D.
No, there is not any implicit consideration as it is clear in working that as advertiment expenses invested in HD Radio will give more segment profit percentage.
A
ORIGINAL DATA
TOTALDEPARTMENT
(IN $)
AM/FM RADIO
(IN $)
HD RADIO
(IN $)
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
SALE
320000
100
270000
100
50000
100
LESS VARIABLE COST
236000
74
216000
80
20000
40
CONTRIBUTION MARGINAL
84000
26
54000
20
30000
60
LESS TRACEABLE FIXED EXPENSES
15000
5
10000
4
5000
10
SEGMENT MARGIN
69000
22
44000
16
25000
50
LESS COMMON FIXED EXPENSES
40000
13
NET OPERATING INCOME
29000
9
ADVERTISEMENT EXPENSES SPENT ON AM/FM RADIO
TOTALDEPARTMENT
(IN $)
AM/FM RADIO
(IN $)
HD RADIO
(IN $)
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
SALE
370000
100
320000
100
50000
100
LESS VARIABLE COST
276000
74
256000
80
20000
40
CONTRIBUTION MARGINAL
94000
26
64000
20
30000
60
LESS TRACEABLE FIXED EXPENSES
15000
5
10000
3
5000
10
ADVERTISEMENT EXPENSES
10000
10000
3
SEGMENT MARGIN
69000
19
44000
14
25000
50
LESS COMMON FIXED EXPENSES
40000
11
NET OPERATING INCOME
29000
8
ADVERTISEMENT EXPENSES SPENT ON HD RADIO
TOTALDEPARTMENT
(IN $)
AM/FM RADIO
(IN $)
HD RADIO
(IN $)
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
AMOUNT
PERCENTAGE
SALE
365000
100
270000
100
95000
100
LESS VARIABLE COST
254000
74
216000
80
38000
40
CONTRIBUTION MARGINAL
111000
26
54000
20
57000
60
LESS TRACEABLE FIXED EXPENSES
15000
5
10000
4
5000
5
ADVERTISEMENT EXPENSES
10000
10000
11
SEGMENT MARGIN
86000
22
34000
13
42000
44
LESS COMMON FIXED EXPENSES
40000
11
NET OPERATING INCOME
46000
13
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