Simon Hinson Company operates two divisions: Gordon and Ronin. A segmented income statement for the companys most

Simon Hinson Company operates two divisions: Gordon and Ronin. A segmented income statement for the company’s most recent year is as follows:

Required
A. If the Gordon Division increased its sales by $85,000 per year, how much would the company’s net income change? Assume that all cost behavior patterns remained constant.
B. Assume that the Ronin Division increased sales by $100,000, the Gordon Division sales remained the same, and there was no change in fixed costs.
1. Calculate the net income amounts for each division and the total company.
2. Calculate the segment margin ratios before and after these changes and comment on the results. Explain the changes.
C. How do the sales increases and decreases impact divisional contribution margin ratio and segment marginratio?

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Total Company $850,000 505,000 S345,000 145,000 S200,000 130,000 S 70,000 Sales Less variable expenses Contribution margin Less traceable fixed costs Division segment margin Less common fixed costs Net income Gordon Division $250,000 145,000 $105,000 Ronin Division $600,000 360,000 $240,000 100,000 $140,000 45,000 $ 60,000