$,**$ANSWER PART $($b$)$ and $($c$)$ ONLY$**$ Sunland Equipment sells equipment to sports enthusiasts. Doug Sunland, the company$$s president, just received the following income statement reporting the results of the past year.

Baseball

Soccer

Basketball

Total

Sales revenue

$$1,200,000$ $$3,450,000$ $$2,275,000$ $$6,925,000$

Variable cost of goods sold

$814,0002,242,5001,825,6004,882,100$

Fixed cost of goods sold

$110,300179,700158,500448,500$

Gross profit

$275,7001,027,800290,9001,594,400$

Variable operating expenses

$162,800552,000227,500942,300$

Fixed operating expenses

$76,20080,50069,900226,600$

Common fixed costs

$57,500124,00092,900274,400$

Operating income

$($$$20,800)$

$$271,300($$$99,400)$ $$151,100$

Doug is concerned that two of the company$$s divisions are showing a loss, and he wonders if the company should stop selling baseball and basketball gear to concentrate solely on soccer gear.

$($a$)$

Your answer is correct.

Prepare a segment margin income statement. Fixed cost of goods sold and fixed operating expenses can be traced to each division. $($If the amount is negative then enter with a negative sign preceding the number, e$.$g$.-5,125$ or parenthesis, e$.$g$.(5,125).)$

Baseball

Soccer

Basketball

Total

select an income statement item

Sales Revenue

Correct answer

$enter a dollar amount

$1200000$

Correct answer $enter a dollar amount

$3450000$

Correct answer $enter a dollar amount

$2275000$

Correct answer $enter a dollar amount

$6925000$

Correct answer

select between addition and deduction

Less

Correct answer:select an opening name for section one

Variable Expenses

Correct answer

select an income statement item

Cost of Goods Sold

Correct answer

enter a dollar amount

$814000$

Correct answer enter a dollar amount

$2242500$

Correct answer enter a dollar amount

$1825600$

Correct answer enter a dollar amount

$4882100$

Correct answer

select an income statement item

Operating Expenses

Correct answer

enter a dollar amount

$162800$

Correct answer enter a dollar amount

$552000$

Correct answer enter a dollar amount

$227500$

Correct answer enter a dollar amount

$942300$

Correct answer

select a summarizing line for the first part

Contribution Margin

Correct answer

enter a total amount for the first part

$223200$

Correct answer enter a total amount for the first part

$655500$

Correct answer enter a total amount for the first part

$221900$

Correct answer enter a total amount for the first part

$1100600$

Correct answer

select an opening name for section two

Traceable Fixed Expenses

Correct answer

select an income statement item

Cost of Goods Sold

Correct answer

enter a dollar amount

$110300$

Correct answer enter a dollar amount

$179700$

Correct answer enter a dollar amount

$158500$

Correct answer enter a dollar amount

$448500$

Correct answer

select an income statement item

Operating Expenses

Correct answer

enter a dollar amount

$76200$

Correct answer enter a dollar amount

$80500$

Correct answer enter a dollar amount

$69900$

Correct answer enter a dollar amount

$226600$

Correct answer

select a summarizing line for the second part

Segment Margin

Correct answer

$enter a total amount for the second part

$36700$

Correct answer $enter a total amount for the second part

$395300$

Correct answer $enter a total amount for the second part

$-6500$

Correct answer enter a total amount for the second part

$425500$

Correct answer

select an income statement item

Common Fixed Expenses

Correct answer

enter a dollar amount

$274400$

Correct answer

select a closing name for this statement

Operating Income

Correct answer

$enter a total amount for this statement

$151100$

Correct answer$**($b$)$

Should Douz cloce the basaball and baskatball divisions?

Doug

consider clasing the basaball division.

Dous

consider clasing the baskatball division.

eTextbook and Medla

Attempts: $0$ of $3$ used

$($c$)$

Doug wants to change the allocation method used to allocate common fixad costs to the divisions. His plan is to allocate these

coats based on sales revenue. Will this new allocation method change your dacision on whather to close the basaball and

baskatball divisions?

Changing allocation methods

change the decision.