O\'Neill, Incorporated\'s segmented income statement for the most recent month i
ID: 2566148 • Letter: O
Question
O'Neill, Incorporated's segmented income statement for the most recent month is given below.
For each of the following questions, refer back to the above original data.
The marketing department believes that a promotional campaign at Store A costing $6,000 will increase sales by $15,000. If its plan is adopted, overall company net operating income should:
Company
Store A
Store B Sales $300,000 $100,000 $200,000 Variable expenses 192,000 72,000 120,000 Contribution margin 108,000 28,000 80,000 Traceable fixed expenses 76,000 21,000 55,000 Segment margin 32,000 $7,000 $25,000 Common fixed expenses 27,000 Net operating income $5,000
Explanation / Answer
particulars Total Store A Store B Sales ( increase by 15000 in total and store A) $315,000 $115,000 $200,000 Less:Variable expenses $192,000 72000 120000 Contribution margin $123,000 43,000 80,000 Traceable fixed expenses ( increase by 6000 in store A and totalby 6000 $82,000 27000 55000 Segment margin $41,000 16,000 25,000 Common fixed expenses $27,000 Net operating income $14,000 Current operating income $5,000 Increased in net operating income $9,000
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