Case $2$: Chapters $6$

Current Year$-$End Results

The Cunes Group has two divisions, one sells automobiles $($Auto$)$ and the other sells recreational vehicles $($RV$).$ The Auto sales are over double the RV sales, and the segment margin amount from each division is the same. The current year's revenue and expense information for Cunes Group is as follows:

Common fixed expenses for the Group total $\backslash$$$3,000,000.$

Required: For the current year, prepare a contribution format income statement segmented by division and for the total Group; and calculate the Break$-$Even for the total group. Opportunity in the upcoming year$-$

The Cunes Group is planning on spending an additional $\backslash$$$1,00,000$ on fixed marketing expenses in the upcoming year. A financial consulting expert determined the following three scenarios:

$1)$ Put the full $\backslash (\backslash$$ $1,000,000\backslash )$ in fixed costs into the Cunes$-$Auto Division and the sales for that Division only will increase by $\backslash (30\backslash \%\backslash ).$

$2)$ Put the full $\backslash (\backslash$$ $1,000,000\backslash )$ in fixed costs into the Cunes $-$ RV Division and the sales for that Division only will increase by $\backslash (30\backslash \%\backslash ).$

$3)$ Put the full $\backslash (\backslash$$ $1,000,000\backslash )$ in common costs into the Cunes Group and the sales for each Division, and the total Group, will increase by $\backslash (15\backslash \%\backslash ).$

$*$Note that the contribution margin for each Division will remain the same in all scenarios

Required: For each scenario $(\backslash (1-3\backslash ))$ prepare a contribution format income statement segmented by division and for the total group. and calculate the Break$-$Even for the total group.

SCENARIO $1$: