The Essential Baking Company bakes artisan loaves, baguettes, and rolls and sells them in cities throughout...

  

Transcribed Image Text:

The Essential Baking Company bakes artisan loaves, baguettes, and rolls and sells them in cities throughout the Northwest. Assume the following March income statement was prepared for the stores located in Seattle and Portland: THE ESSENTIAL BAKING COMPANY Territory Income Statements For Month of March (in thousands) Seattle Portland Total Sales. .. Cost of goods sold $6,800 (3,894) $8,400 $15,200 (4,796) (8,690) Gross profit. Selling and administrative expenses 3,604 2,906 6,510 (2,755) (2,155) (4,910) Net income. $ 849 $ 751 $ 1,600 Sales and selected variable expense data are as follows: Products Loaves Baguettes Rolls Fixed baking expenses. . $ 565 $ 450 $410 Variable baking expenses as a percentage of sales Variable selling expenses as a percentage of sales. City of Seattle, sales (in thousands). City of Portland, sales (in thousands). 50% 50% 40% 10% 20% 20% $3,800 $3,250 $1,950 $2,650 $2,150 $1,400 The fixed selling expenses were $1,440 for March, of which $860 was a direct expense of the Seattle market and $580 was a direct expense of the Portland market. Fixed administrative expenses were $1,135, which management has decided not to allocate when using the contribution approach. Required a. Prepare a segment income statement showing the margin for each territory (city) for March. In- clude a column combining the two territories. b. Prepare segment income statements showing the product margin for each product. Include a col- umn for the combined products. c. If the rolls line is dropped and fixed baking expenses do not change, what is the product margin for loaves and baguettes? d. What other type of segmentation might be useful to The Essential Baking Company. Explain. The Essential Baking Company bakes artisan loaves, baguettes, and rolls and sells them in cities throughout the Northwest. Assume the following March income statement was prepared for the stores located in Seattle and Portland: THE ESSENTIAL BAKING COMPANY Territory Income Statements For Month of March (in thousands) Seattle Portland Total Sales. .. Cost of goods sold $6,800 (3,894) $8,400 $15,200 (4,796) (8,690) Gross profit. Selling and administrative expenses 3,604 2,906 6,510 (2,755) (2,155) (4,910) Net income. $ 849 $ 751 $ 1,600 Sales and selected variable expense data are as follows: Products Loaves Baguettes Rolls Fixed baking expenses. . $ 565 $ 450 $410 Variable baking expenses as a percentage of sales Variable selling expenses as a percentage of sales. City of Seattle, sales (in thousands). City of Portland, sales (in thousands). 50% 50% 40% 10% 20% 20% $3,800 $3,250 $1,950 $2,650 $2,150 $1,400 The fixed selling expenses were $1,440 for March, of which $860 was a direct expense of the Seattle market and $580 was a direct expense of the Portland market. Fixed administrative expenses were $1,135, which management has decided not to allocate when using the contribution approach. Required a. Prepare a segment income statement showing the margin for each territory (city) for March. In- clude a column combining the two territories. b. Prepare segment income statements showing the product margin for each product. Include a col- umn for the combined products. c. If the rolls line is dropped and fixed baking expenses do not change, what is the product margin for loaves and baguettes? d. What other type of segmentation might be useful to The Essential Baking Company. Explain.

Answer rating: 100% (QA)

answers 1 Dividing Direct fixed baking expenses as a proportion of sales as there is no mention of a... View the full answer