Chapter 5 Quiz

1.

(TCO D) Data for January concerning Del Mar Corporation's two major business segments-Fibers and Feedstocks-appear below:

|Sales revenues, Fibers |$870,000 |

|Sales revenues, Feedstocks |$800,000 |

|Variable expenses, Fibers |$426,000 |

|Variable expenses, Feedstocks |$344,000 |

|Traceable fixed expenses, Fibers |$148,000 |

|Traceable fixed expenses, Feedstocks |S156,000 |

Common fixed expenses totaled $314,000 and were allocated as follows: $129,000 to the Fibers business segment and $185,000 to the Feedstocks business segment.

Required:

Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only dollar amounts. 

2. (TCO D) Cuisine Master is a division of a major corporation. The following data are for the latest year of operations.

|Sales |$30,000,000 |

|Net Operating income |$1,170,000 |

|Average operating assets |$8,000,000 |

|The company's minimum required rate of return |18% |

Required:

i. What is the division's margin?

ii. What is the division's turnover?

iii. What is the division's ROI?

iv. What is the division's residual income?

3. (TCOD) The management of Union Co. is considering dropping product L57V. Data from the company's accounting system appear below.

|Sales |$480,000 |

|Variable Expenses |$202,000 |...