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bearhunter [10]
3 years ago
10

Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Dunn Company's six divisio

ns. Veronica made the following presentation to Dunn's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $25,500."The Other Five Divisions Percy Division TotalSales $1,663,000 $100,000 $1,763,000Cost of goods sold 977,000 76,000 1,053,000Gross profit 686,000 24,000 710,000Operating expenses 526,000 49,500 575,500Net income $160,000 $ (25,500) $134,500In the Percy Division, cost of goods sold is $59,000 variable and $17,000 fixed, and operating expenses are $29,000 variable and $20,500 fixed.
None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Veronica right about eliminating the Percy Division?
Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)Continue Eliminate Net Income Increase (Decrease)Sales $ $ $ Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) $ $ $

Is Veronica right, or wrong?
Business
1 answer:
anygoal [31]3 years ago
4 0

Answer:

Effect on income= -$49,500

They lost the positive contribution margin increased by the fixed costs. Veronica is wrong.

Explanation:

Giving the following information:

Veronica made the following presentation to Dunn's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $25,500.

Percy Division

Sales= $100,000

Cost of goods sold= 76,000

Gross profit= 24,000

Operating expenses= 49,500

Net income= (25,500)

In the Percy Division, the cost of goods sold is $59,000 variable and $17,000 fixed, and operating expenses are $29,000 variable and $20,500 fixed.

None of the Percy Division's fixed costs are avoidable.

Effect on income= -contribution margin - fixed costs

Effect on income= -(100,000 - 88,000) - 37,500= -$49,500

They lost the positive contribution margin increased by the fixed costs.

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Elbert Company classifies its selling and administrative expense budget into variable and fixed components. Variable expenses ar
weqwewe [10]

Answer:

Results are below.

Explanation:

Giving the following information:

Variable expense= $26,770 ($5,240 increase each quarter)

Fixed expense= $41,680

<u>First, we will calculate the total cost per quarter:</u>

Q1= 26,770 + 41,680

Q1= $68,450

Q2= (26,770 + 5,240) + 41,680

Q2= $73,690

Q3= (32,010 + 5,240) + 41,680

Q3= $78,930

Q4= (37,250 + 5,240) + 41,680

Q4= $84,170

<u>Now, the total cost:</u>

Total annual cost= $305,240

3 0
3 years ago
Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $265,000, vari
Bogdan [553]

Answer:

$57,300

Explanation:

Calculation to determine the company's net operating income

Sales $840,000

($265,000+$575,000)

Less Variable expenses $463,400

($141,600+$321,800)

Contribution margin $376,600

($840,000-$463,400)

Less Traceable fixed expenses $193,100

($66,800+$126,300)

Divisional segment margin $183,500

Less Common fixed expenses $126,200

Net Operating Income $57,300

Therefore the company's net operating income will be $57,300

7 0
3 years ago
What is the effect on the financial statement when a company fails to record depreciation?
Mashutka [201]

Answer:

d. Net income is overstated and assets are overstated

Explanation:

The journal entry to record the depreciation expense is shown below:

Depreciation expense A/c Dr

      To Accumulated depreciation A/c

(Being the depreciation expense is recorded)

But if depreciation is failed to record, then the net income is overstated and assets are overstated as the accumulated depreciation decrease the cash balance and The net income overstated represents the understated in an expense account

7 0
3 years ago
Calculate Payroll K. Mello Company has three employees-a consultant, a computer programmer, and an administrator. The following
Bumek [7]

Answer:

1. Consultant's earning

Gross pay $2,810

Net pay $1,669.25

2. Computer Programmer

Gross pay $2,520

Net pay $2,093

3. Administrator Income

Gross pay $3,565

Net pay $2,782.62

Explanation:

Calculation to Determine the gross pay and the net pay for each of the three employees for the current pay period

1. Calculation for Consultant Income gross pay and Net pay

Consultant's earning = $2,810

Based on the information given Consultant's GROSS PAY will be $2,810

Calculation to determine the Net pay using this formula

NET PAY = Gross pay - Withheld tax - Medicare tax - social security tax

Let plug in the formula

Where,

Withheld tax = $930

Social security tax = 6% of Total earning

Social security tax= $2,810 * 6%

Social security tax= $168.6

Medicare tax = 1.5% of total earning

Medicare tax= $2,810 * 1.5%

Medicare tax = $42.15

Let plug in the formula

NET PAY = $2,810 - $930 - $42.15 - $168.6

NET PAY= $1,669.25

Therefore Consultant Income gross pay is $2,810 and Net pay is $1,669.25

2. Calculation to determine Computer Programmer gross pay and Net pay

Calculation for GROSS PAY

Rate of earning = $36 per Hour

Working Hours = 55 Hours

Computer programmer Earning = $36 * 55

Computer programmer Earning= $1,980

Overtime hours = 55 - 40

Overtime hours= 15 hours

Overtime earning = 2 times of hourly rate = 15* $36

Overtime earning= $540

GROSS PAY = $1,980+$540

GROSS PAY=$2,520

Calculation to determine the NET PAY

Using this formula

Net Pay = Gross pay - Withheld tax - Medicare tax - Social security tax

Where,

Withheld tax = $238

Social security tax = ($1,980+$540) * 6%

Social security tax= $2,520*6%

Social security tax=$151.2

Medicare tax = 1.5% of total earning

Medicare tax= $2,520 * 1.5%

Medicare tax = $37.8

Let plug in the formula

NET PAY = $2,520 - $238 - $37.8 - $151.2

NET PAY =$2,093

Therefore Computer Programmer Gross pay is $2,520 and the Net pay is $2,093

3. Calculation for Administrator Income Gross pay and Net pay

Calculation for GROSS PAY

Rate of earning = $46 per Hour

Working Hours = 65 Hours

Administrator Earning = $46 * 65

Administrator Earning= $2,990

Overtime hours = 65 - 40

Overtime hours= 25 hours

Overtime earning = 1.5 times of hourly rate = 25 * ($46/2) ( half of the rate is taken)

Overtime earning =25*23

Overtime earning =$575

GROSS PAY = $2,990+$575

GROSS PAY =$3,565

Calculation to determine the NET PAY

Using this formula

Net Pay = Gross pay - Withheld tax - Medicare tax - Social security tax

Where,

Withheld tax = $515

Social security tax = ($2,990+$575) * 6%

Social security tax= $3,565*6%

Social security tax=$213.9

Medicare tax = 1.5% of total earning

Medicare tax = $3,565 * 1.5%

Medicare tax =$53.48

Let plug in the formula

NET PAY = $3,565 - $515 - $53.48 - $213.9

NET PAY= $2,782.62

Therefore Administrator Income is Gross pay $3,565 and the Net pay is $2,782.62

6 0
2 years ago
Garden Variety Flower Shop uses 630 clay pots a month. The pots are purchased at $2.60 each. Annual carrying costs per pot are e
TiliK225 [7]

Answer:

See attached file

Explanation:

4 0
3 years ago
Read 2 more answers
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