a..Exercise #1: (Keep or Drop a Segment) G Company has three stores known as Big, Medium,...

 

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a..Exercise #1: (Keep or Drop a Segment) G Company has three stores known as Big, Medium, and Small respectively. Total Sales from the three stores were $1,500,000 this last year. Information from the accounting information system on recent performance is as follows: Big Medium Small Sales 25,000 units @ $30 = $750,000 (this is 50% of company sales) 18,750 units @ $32 = $600,000 (this is 40% of company sales) 3,750 units @ $40 = $150,000 (this is 10% of company sales) $24 $24 $36 Variable Costs Per Unit Traceable Fixed Costs $20,000 $10,000 $ 5,000 (Advertising) Allocated Companywide $69,000 $55,200 $13,800 Fixed Costs ($138,000 total allocated by sales 50%,40%, 10%) REQUIRED: (a) Prepare G Company's Segment Margin Income Statement with a column for each subunit, and a fourth column for "Total" for the entire company. (b) Then write a sentence telling whether "Small" store should be closed or not. (c) Then write several sentences explaining why or why not it should be closed AND what the relevant dollar amount change in total company income would be if it was closed. a..Exercise #1: (Keep or Drop a Segment) G Company has three stores known as Big, Medium, and Small respectively. Total Sales from the three stores were $1,500,000 this last year. Information from the accounting information system on recent performance is as follows: Big Medium Small Sales 25,000 units @ $30 = $750,000 (this is 50% of company sales) 18,750 units @ $32 = $600,000 (this is 40% of company sales) 3,750 units @ $40 = $150,000 (this is 10% of company sales) $24 $24 $36 Variable Costs Per Unit Traceable Fixed Costs $20,000 $10,000 $ 5,000 (Advertising) Allocated Companywide $69,000 $55,200 $13,800 Fixed Costs ($138,000 total allocated by sales 50%,40%, 10%) REQUIRED: (a) Prepare G Company's Segment Margin Income Statement with a column for each subunit, and a fourth column for "Total" for the entire company. (b) Then write a sentence telling whether "Small" store should be closed or not. (c) Then write several sentences explaining why or why not it should be closed AND what the relevant dollar amount change in total company income would be if it was closed.

Answer rating: 100% (QA)

Solution a Segment Margin Income Statement for the entire Company SNo Particulars Big ... View the full answer