INCLUDE SOLUTIONS

1. Data for July for MOSSMAN Corporation and its two major business segments, North and South appear below:

Sales revenue, North	540,000
Variable costs, North	259,000
Traceable FC, North	70,000
Sales revenue, South	800,000
Variable expenses, South	408,000
Traceable FC, South	80,000

In addition, common fixed expenses totaled 319,000 and were allocated as follows: 160,000 to the North business segment and 159,000 to the South business segment.

1.a) A properly constructed income statement in a contribution format would show that the net operating income of the company as a whole is ________________.

a. 673,000

b. 204,000

c. 523,000

d. 115,000

1.b) The contribution margin of the SOUTH business segment is ________________ .

a. 673,000

b. 392,000

c. 211,000

d. 51,000

1.c) A properly constructed income statement in a contribution format would show that the segment margin of the NORTH business segment is ________________.

a. 259,000

b. 121,000

c. 211,000

d. 51,000

2. BEAK Industries is a division of a major corporation. Last year the division had total sales of 10,600,000, net operating income of 1,070,600, and average operating assets of 4,000,000.

The divisions return on investment (ROI) is closest to ________ .

a. 2.7%

b. 7.3%

c. 21.1%

d. 26.8%