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Segment Margin Income Statement

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The segment margin income statement excludes
All allocated costs in the calculation of the segment margin.
All fixed costs.
All period costs.
Manufacturing overhead.

Question 12. 12. Sara's Cake Company has started to do really well. Sara wants to see how much of a return she has now made on the company last year. Using the following information, calculate the return on investment.

Total Revenue last year: $250,000

Assets Jan. 1st: $50,000

Assets Dec. 31st: $80,000

Liabilities Jan. 1st: $45,000

Liabilities Dec. 31st: $15,000

Total Expenses last year: $100,000

188%

231%
385%

500%

Question 13. 13. Which one of the following is an example of transfer pricing?
Ford buys plastic from Du Pont plastics to use in car production

Google takes profits from YouTube and distributes it to is shareholders

Ratheon signs a government contract to sell specific arms to the military

Coca-cola Bottling sells bottles to the Coca-cola company

Question 14. 14. Sara's Cake Company is determining which types of cakes sold well last year. When using these numbers to look at metrics, what would this performance measure be called?

Financial measures

Non-financial measures

Lagging indicators
Leading indicators

Question 15. 15. Sara's Cake Company has been doing some analysis and has decided to buy a new convection oven that will cut down production times of cakes by 15 minutes and allow for better texture in the cakes. Which part of the balanced scorecard would this be?
Internal business process perspective

External business process perspective

Customer perspective

Financial perspective

Question 16. 16. Which one of the following is a good example of benchmarking as a business process?
Coca-cola buys a new no-calorie sweetener to add to its diet colas
Home Depot studies Amazon.com's shipping policies to improve its own

Cisco acquires a smaller company that invented a new router design

Sirius and XM merge to consolidate all of their channel lineups into one offering

Question 17. 17. Which of the following measures are directly related to the financial perspective of a balanced scorecard? Market share, cash flow, revenue growth
Net income, cash flow, revenue growth

Market share, product return rate, cash flow

Net income, cash flow, product return rate

Question 18. 18. Which of the following is not a main barrier to the effective use of non-financial performance measures by organizations?
Skepticism that the measures are directly related to the bottom line

Lack of management skill needed to implement the measures
Lack of familiarity with the measures on the part of the board members

Undeveloped tools for analyzing the measures

Question 19. 19. Which of the following is not a reason companies use key performance indicators?
Align business activity with corporate strategy
Improve company performance
Improve timeliness of business decisions

All of these answer choices are reasons companies use key performance indicators

Question 20. 20. Qualitative indicators tend to be based on _______ .

Feelings or accounting records.

None of these answer choices are correct.
Feelings or perceptions.
Accounting records or perceptions.

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Solution Summary

This solution provides an explanation to questions based on management accounting.

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See Also This Related BrainMass Solution

Segmented income statements

See attachment .

Total Company Percentage Houston Dallas

Sales $750,000 100% $150,000 100% $600,000 100%
Variable expenses 405,000 54 45,000 30% 360,000 60%
Contribution margin 345,000 46 105,000 70 240,000 40
Traceable fixed expenses 168,000 22.4 78,000 52 90,000 15
Office segment margin 177,000 24 27,000 18% $150,000 25%
Common fixed 120,000 16
expenses not traceable to offices

Net operating income $57,000 7.60%

1. By how much would the company's net opertaing income increase if Dallas increased its sales by $75,000
per year? Assume no change in cost behavior patterns.

2. Refer to the original data. Assume that sales in Houston increase by $50,000 next year and that sales in
Dallas remain unchanged. Assume no change in fixed cost.
a. Prepare a new segmented income statement for the company using the above format. Show both amounts
and percentages.

b. Observe from the income statement you have prepared that CM ration for Houston has remained unchanged
at 70%(the same as in the above data) but that the segment margin ration has changed. How do you
explain the change in the segment margin ratio?

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