The most recent monthly contribution format income statement for Raven Company is given below:
For the Month Ended May 31
Sales $900,000 100.0%
Variable expenses 408,000 45.3
Contribution 492,000 54.7
Fixed expenses 465,000 51.7
Net operating income $ 27,000 3.0%
Management is disappointed with the company's performance and is wondering what can be done to improve profits. By examining sales and cost records the following is determined:
a. The company is divided into two sales territories-Central and Eastern. The Central Territory recorded $400,000 in sales and $208,000 in variable expenses during May. The remaining sales and variable expenses were recorded in the Eastern Territories. Fixed expenses of $160,000 and $130,000 are traceable to the Central and Eastern Territories, respectively. The rest of the fixed expenses are common to the two territories.
b. The company is the exclusive distributor for two products- Haws and Paws. Sales of Haws and Paws totaled to $100,000 and $300,000, respectively, in the Central Territory during May. Variable expenses are 25% of the selling price for Haws and 61% for Paws. Cost records show that $60,000 of the Central Territory's fixed expense is traceable to Haws and $54,000 to Paws, with the remainder common to the two products.
1. Prepare contribution format segmented income statements, the first showing the total company broken down between sales territories and then showing the Central Territory broken down by product line. Show both Amount and Percent columns for the company in total and for each segment. Round percentage computations to one decimal place.
2. After reviewing the Central Territory segmented by sales territory, and find what points revealed by this statement should be brought to management attention.
3. After viewing the Central Territory segmented by product line, what points should be brought to management attention?© BrainMass Inc. brainmass.com October 16, 2018, 11:01 pm ad1c9bdddf
Using Demographic Information from the AMA in Product Decision-Making
One of WidgeCorp's regional sales managers contacts you with a request. In preparation for rolling out a new type of snack food, she's been trying to make sense of some demographic data available through the AMA (American Marketing Association) and is overwhelmed. She explains to you that there are two files which contain reports generated from AMA's (American Marketing Association) website. AMA's website provides free demographical services where one can choose from a variety of criteria and generate reports based on the U.S. Census decennial data obtained at the beginning of each decade. These files contain 4 reports: General Summary, Census Trend 1980 to 2000 Summary, Occupation and Employment Summary, and Income Summary. In these demographics reports the data for many of the variables is distributed into many different categories. For example, there are 7 different categories for Educational Attainment in the General Summary Report and 20 categories for Employment by Industry in the Occupation and Employment Summary Report. Help this regional sales manager see a smaller number of comprehensible categories.
Summary reports. (n.d.). Retrieved March 3, 2006, from the Free Demographics Service on the American Marketing Association Web site are attached. Using all four demographic reports: (Overview, Trend, Employment, and Population Detail) for zip code 60614, choose four variables (including at least one from each report) and explain how you would collapse the categories and why.
Respond to the regional sales manager.View Full Posting Details