Show-Off, Inc. sells merchandise through three retail outlets-in Las Vegas, Reno, and Sacramento- and operates a general
Question:
¢ The sales volume, sales price, and purchase price data follow:
¢ The following expenses were incurred for sales commissions, local advertising, property taxes, management salaries, and other non-controllable (but traceable) costs:
Local advertising decisions are made at the store manager level. The sales manager's salary in
Sacramento is determined by the Sacramento store manager; in contrast, store manager salaries are set by Show-Off's vice president.
¢ Non-traceable fixed corporate expenses total $192,300.
¢ The company uses a responsibility accounting system.
Required:
1. Assume the role of Judson Wyatt and prepare a segmented income statement for Show-Off?
2. Determine the weakest-performing store and present an analysis of the probable causes of poor performance?
3. Assume that an opening has arisen at the Reno corporate headquarters and the company's chief executive officer (CEO) desires to promote one of the three existing store managers. In evaluating the store managers' performance, should the CEO use a store's segment contribution margin, the profit margin controllable by the store manager, or a store's segment profit margin? Justify your answer.
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Step by Step Answer:
Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-0078110917
9th edition
Authors: Ronald W. Hilton