You are a division manager at Caddo Co. Below is your division's income statement and other...
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You are a division manager at Caddo Co. Below is your division's income statement and other relevant information for the current year: GAAP Income Statement Revenue $250,000 Cost of Goods Sold 125,000 Gross Margin 125,000 Administrative Costs 45,000 Selling Costs 55,000 Profit 25,000 Other Relevant Information and Detail on Data in GAAP income statement Fixed Mfg OH costs $22,000 Variable Mfg OH $0 Fixed Admin costs $45,000 Variable selling costs 3% of revenues A) Make an income statement in the space below for your division using the contribution margin format. B) For purposes of the next two questions, assume that all costs shown on the income statement(that you just prepared in part A) can be directly traced to your division (i.e., there are no corporate-level allocations) i. Compute the breakeven point in total $ of revenues. ii. If revenues increased by $10,000 from your answer in part A, how much would your profits increase? Assume that the increase in revenue are purely a result of increased sales volume. You are a division manager at Caddo Co. Below is your division's income statement and other relevant information for the current year: GAAP Income Statement Revenue $250,000 Cost of Goods Sold 125,000 Gross Margin 125,000 Administrative Costs 45,000 Selling Costs 55,000 Profit 25,000 Other Relevant Information and Detail on Data in GAAP income statement Fixed Mfg OH costs $22,000 Variable Mfg OH $0 Fixed Admin costs $45,000 Variable selling costs 3% of revenues A) Make an income statement in the space below for your division using the contribution margin format. B) For purposes of the next two questions, assume that all costs shown on the income statement(that you just prepared in part A) can be directly traced to your division (i.e., there are no corporate-level allocations) i. Compute the breakeven point in total $ of revenues. ii. If revenues increased by $10,000 from your answer in part A, how much would your profits increase? Assume that the increase in revenue are purely a result of increased sales volume.
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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