Sherpa Company manufactures tents and sleeping bags. Tents are priced at $80, ha

Question

Sherpa Company manufactures tents and sleeping bags. Tents are priced at $80, have variable cost of $55, and direct fixed costs of $120,000. Sleeping bags are priced at $60, have variable cost of $35, and direct fixed costs of $66,000. Common fixed costs equal $200,000. Last year, the division sold 5,000 tents and 10,000 sleeping bags.

Use the minus sign to indicate negative numbers.

A. What was the segment margin for tents last year?
$

B. What was the segment margin for sleeping bags last year?
$

C. What was Sherpa's operating income (loss) last year?
$

D. If Sherpa stopped making tents, what would operating income (loss) be?
$

Explanation / Answer

tents sleeping bags total SP 80 60 variable cost 55 35 contribution 25 25 no of units sold 5000 10000 total contribution 125000 250000 375000 direct fixed cost 120000 66000 186000 segment income 5000 184000 189000 common fixed cost 200000 net income -11000 A 5000 B 184000 C -11000 D -16000

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