accounting P$-$M:$6-35$B$.$ Using variable and absorption costing, making decisions

$($Learning Objectives $1,2,3)$

The annual data that follow pertain to Eli's Electric Eyewear, a

manufacturer of swimming goggles. $($Eli$\text{'}$s Electric Eyewear had no

beginning Finished Goods Inventory in January.$)$

Requirements

Prepare both conventional $($absorption costing$)$ and contribution

margin $($variable costing$)$ income statements for Eli's Electric Eyewear

for the year ended December $31.$ Which statement shows the higher operating income? Why?

Eli's Electric Eyewear's marketing vice president believes a new

sales promotion that costs $$60,000$ would increase sales to $220,000$

goggles. Should the company go ahead with the promotion? Give your

reasoning.

P$-$M:$6-36$B$.$ Using variable costing, service company $($Learning

Objective $4)$

Divine Pool Cleaning Service provides pool cleaning services to

residential customers. The company has three employees, each assigned

to specific customers. The company considers each employee's territory

as a business segment. The company incurs variable costs that include

the employees' wages, pool chemicals, and gas for the service vans. Fixed

costs include depreciation on the service vans. Following is the income

statement for the month of August:

DIVINE POOL CLEANING SERVICE

Income Statement

For the Month Ended Auaust $31.2024$ Requirements

Calculate the contribution margin ratio for each business segment.

CMR Moore $70\%$

The business segments had the following number of customers:

Byson, $80$; Moore, $50$; and Freeman, $110.$ Compute the service revenue

per customer, variable cost per customer, and contribution margin per

customer for each business segment. Requirements

Calculate the contribution margin ratio for each business segment.

CMR Moore $70\%$

The business segments had the following number of customers:

Byson, $80$; Moore, $50$; and Freeman, $110.$ Compute the service revenue

per customer, variable cost per customer, and contribution margin per

customer for each business segment.

Which business segment was most profitable? List some possible

reasons why this segment was most profitable. How might the various

reasons affect the company in the long term?