Low Segment Margin

Top management can’t understand why the Leather Division has such a low segment margin when its sales are only
30%

 

ORDER A PLAGIARISM-FREE PAPER HERE

less than sales in the Cloth Divion. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is avalisble on the product lines in the Leather Division: Aralysis shows that R7L.000 of the Leather Dwision’s seiling and odminut atve expenses ase common to the product lines. Requilred 1. Prepare a contribution format segmented income statement for the Leather Division weh segments defined as product fnes. 2. Managernent as surpised by the handbsg product line’s poor showing and would loce to hove the product line segmented by market. The following information is twaliable about the markets in which the handosg fine is sold: Al of the handbag product line’s seling and adminatrateve expenses and degreciation are common to the markets in which the peoduct is soldi. Prepsie a contribution format segmented income statemere for the handigg product iline with segments defined as markets 2. Low Segment Margin Management is surprised by the handbag product line’s poor showing and would ilke to have the product line segmented by market. The following information is available about the markets in which the handbag line is sold: All of the handbag product line’s selling and administrative expenses and depreciation are common to the markets in which the product is sold. Prepare a contribution format segmented income statement for the handbag product line with segments defined as markets. 3. Refer to the statement prepared in (1) above. The sales manager wants to run a special promotional campaign on one of the product ines over the next month. A marketing study indicates that such a campaign would increase sales of the Garments product line by R211,000 or sales of the shoes product line by R156,000. The campaign would cost R41,000. a. Compute the increased operating income for these product lines for the expected increased sales. Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company’s contribution format segmented income stateme terms of the Brazlilan currency, the real, R) for last month is given below: Top management can’t understand why the Leather Division has such a low segment margin when its sales are only
30% Low Segment Margin
less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division: Analysls shows that R71,000 of the Leather Division’s selling and administrative expenses are common to the product lines. Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines. 2. Management is surprised by the handbag product line’s poor showing and would like to have the product line segmented market. The following information is available about the markets in which the handbag line is sold: All of the handbag product line’s selling and administrative expenses and depreciation are common to the markets in which the product is sold. Prepare a contribution format segmented income statement for the handbag product line with segments defined markets. 3. Refer to the statement prepared in (1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A marketing study indicates that such a campaign would increase sales of the Garments product line by R211,000 or sales of the shoes product line by R156.000. The campaign would cost
R41,000
. a. Compute the increased operating income for these product lines for the expected increased sales. Low Segment Margin

× How can I help you?