ACC EXCEL
MaxZhou
Class21-Inclasswork.xlsxContribution Income Statement
| Shaley Company has two divisions and the following information available | ||||
| 1) Net sales were $130,000. $90,000 was attributed to the Jewel Division | ||||
| 2) Variable costs were $80,000. 40% was attributed to the Song Division | ||||
| 3) Total separable fixed costs controllable by division managers were $30,000, of which $20,000 applied to the Jewel Division | ||||
| 4) Total separable fixed costs, not controllable by division managers were $10,000 in the Jewel Division and $4,000 in the Song Division | ||||
| 5) Unallocated costs were $7,000 | ||||
| 1. Prepare a contribution approach income statement for the company as a whole and each division. | ||||
| 2. Which division manager should receive a bonus? Why? | ||||
| Entire Company | Jewel Division | Song Division | ||
| Net Sales | $ 130,000 | $ 90,000 | $ 40,000 | |
| Variable Costs | $ 80,000 | $ 48,000 | $ 32,000 | |
| Contribution Margin | $ 50,000 | $ 42,000 | $ 8,000 | |
| Fixed Costs Controllable by div. managers | $ 30,000 | $ 20,000 | $ 10,000 | |
| Contribution Controllable by divison managers | $ 20,000 | $ 22,000 | $ (2,000) | |
| Fixed Costs Controllable by others | $ 14,000 | $ 10,000 | $ 4,000 | |
| Contribution by divison | $ 6,000 | $ 12,000 | $ (6,000) | |
| Less: Unallocated costs | $ 7,000 | |||
| Income before taxes | $ (1,000) |
Controllable vs Uncotrollable
| Two Divisions | West Divison Only | West Division: Meats Only | ||||||||
| Company as Whole | East Division | West Division | Not Allocated | Groceries | Produce | Meats | Not Allocated | Store 1 | Store 2 | |
| Net Sales | $ 4,000.00 | $ 1,500.00 | $ 2,500.00 | $ 1,300.00 | $ 300.00 | $ 900.00 | $ 600.00 | $ 300.00 | ||
| Variable Costs | ||||||||||
| Cost of Merchandise | $ 3,000.00 | $ 1,100.00 | $ 1,900.00 | $ 1,000.00 | $ 230.00 | $ 670.00 | $ 450.00 | $ 220.00 | ||
| Variable Operating Costs | $ 260.00 | $ 100.00 | $ 160.00 | $ 100.00 | $ 10.00 | $ 50.00 | $ 35.00 | $ 15.00 | ||
| Total Variable Costs | $ 3,260.00 | $ 1,200.00 | $ 2,060.00 | $ 1,100.00 | $ 240.00 | $ 720.00 | $ 485.00 | $ 235.00 | ||
| a) Contribution Margin | $ 740.00 | $ 300.00 | $ 440.00 | $ 200.00 | $ 60.00 | $ 180.00 | $ 115.00 | $ 65.00 | ||
| Less: Fixed Costs controlled by segment managers | $ 260.00 | $ 100.00 | $ 160.00 | $ 20.00 | $ 40.00 | $ 10.00 | $ 90.00 | $ 30.00 | $ 35.00 | $ 25.00 |
| b) Contribution controllable by segment managers | $ 480.00 | $ 200.00 | $ 280.00 | $ (20.00) | $ 160.00 | $ 50.00 | $ 90.00 | $ (30.00) | $ 80.00 | $ 40.00 |
| Less: Fixed Costs controlled by others | $ 200.00 | $ 90.00 | $ 110.00 | $ 20.00 | $ 40.00 | $ 10.00 | $ 40.00 | $ 10.00 | $ 22.00 | $ 8.00 |
| Contribution by segments | $ 280.00 | $ 110.00 | $ 170.00 | $ (40.00) | $ 120.00 | $ 40.00 | $ 50.00 | $ (40.00) | $ 58.00 | $ 32.00 |
| Less: Unallocated Costs | $ 100.00 | |||||||||
| Income before income taxes | $ 180.00 |
Balanced Scorecard
| A | B | C | ||||||||||||
| Financial | %'age growth in profits | |||||||||||||
| Revenue from new clients? | ||||||||||||||
| Customer | ||||||||||||||
| Internal Business Process | ||||||||||||||
| Organizational Learning | ||||||||||||||
Homework #1
Homework #2
| Company as | Breakdown into Two Divisions | Breakdown of Waterloo Division | Breakdown of Cedar Rapids Division | |||||
| a Whole | ||||||||
| Net Sales | $ 8,000 | |||||||
| Cost of Merchandise Sold | $ 3,500 | |||||||
| Gross Margin | $ 4,500 | |||||||
| Variable Operating Expenses | $ 640 | |||||||
| Contribution Margin | $ 3,860 | |||||||
| Fixed Costs Controlled by Segment Managers | $ 960 | |||||||
| Contribution Contollable by Segment Managers | $ 2,900 | |||||||
| Fixed Costs Controlled by Others | $ 490 | |||||||
| Contribution by Segment | $ 2,410 | |||||||
| Unallocated Costs | $ 110 | |||||||
| Income Before Taxes | $ 2,300 |
