3. ny, a wholesale distributor of umbrellas, has been experiencing losses for so

Question

3. ny, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement Sales Variable expenses $2,070,000 895,880 Contribution margin Fixed expenses 1,174,120 1,319,000 S (144,880) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: phic Ma Sales 36% 46% $320,000 $480,000 $307,000 fixed expenses

Explanation / Answer

2.b No as the Loss is further increased to 18150 if we increase advertisement by 32000, it is not recommended to increase the advertisement expenses

Total South central North revised south sales 2070000 607000 806000 657000 667700 variable cost 895880 303500 290160 302220 365850 contribution 1174120 303500 515840 354780 301850 fixed cost 1319000 320000 480000 307000 320000 Operating Profit /Loss -144880 -16500 35840 47780 -18150

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