ACC EXCEL

C

ontribution Income Statement

Jewel Division Song Division

$ 20,000

$ 10,000

																																																																																																																		Shaley Company has two divisions and the following information available
1) Net sales were $130,000. $90,000 was attributed to the Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	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
		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	$ 22,000	$ (2,000)
Fixed Costs Controllable by others	$ 14,000	$ 4,000
Contribution by divison	$ 6,000	$ 12,000	$ (6,000)
Less: Unallocated costs	$ 7,000
Income before taxes	$ (1,000)

Controllable vs Uncotrollable

:

Only

Whole

West Division

llocated

Meats Not Allocated

Net Sales

$ 300.00

Variable Costs

$ 100.00

$ 1,100.00

$ 300.00

$ 260.00 $ 100.00 $ 160.00

$ 10.00

$ 35.00

$ 200.00

$ 160.00 $ 50.00 $ 90.00

$ 40.00

$ 200.00 $ 90.00

.00

$ 20.00 $ 40.00 $ 10.00 $ 40.00 $ 10.00

$ 280.00 $ 110.00

$ 40.00 $ 50.00 $ (40.00)

$ 100.00

$ 180.00

Two Divisions	West Divison Only		West Division	Meats
	Company as	East Division		Not	A	Groceries	Produce	Store 1	Store 2
$ 4,000.00	$ 1,500.00	$ 2,500.00	$ 1,300.00			$ 300.00	$ 900.00	$ 600.00
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				$ 10.00			$ 50.00		$ 35.00	$ 15.00
Total Variable Costs	$ 3,260.00	$ 1,200.00	$ 2,060.00	$ 240.00	$ 720.00	$ 485.00	$ 235.00
a) Contribution Margin	$ 740.00	$ 440.00			$ 200.00	$ 60.00		$ 180.00	$ 115.00	$ 65.00
Less: Fixed Costs controlled by segment managers		$ 20.00					$ 40.00			$ 90.00	$ 30.00	$ 25.00
b) Contribution controllable by segment managers	$ 480.00		$ 280.00	$ (20.00)	$ (30.00)	$ 80.00
Less: Fixed Costs controlled by others			$ 110	$ 22.00	$ 8.00
Contribution by segments	$ 170.00		$ (40.00)	$ 120.00	$ 58.00	$ 32.00
Less:	Unallocated Costs
Income before income taxes

B

alanced 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

Net Sales $ 8,000
Contribution Margin

Unallocated Costs $ 110

Breakdown into Two Divisions	Breakdown of Waterloo Division	Breakdown of Cedar Rapids Division
a Whole
Cost of Merchandise Sold	$ 3,500
Gross Margin	$ 4,500
Variable Operating Expenses	$ 640
$ 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
Income Before Taxes	$ 2,300