Operating income, contribution margin of each department

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• Compute operating income, contribution margin, income of each

  compute the operating income of the company b. compute the contribution margin and operating income of each department c. should any department be eliminated, if so which ones and why?

• Management Accounting: prepare a segmented income statement for Pumpkin, Inc.

  Even though this department is not that profitable and has contribution margin of only 55%, that results in negative operating income, it helps the company to allocate the fixed costs.

• Basics of CVP analysis: Cost Structure

  INCOME STATEMENT TOTAL Units Per Unit SALES 1053000 39000 27 LESS VARIABLE EXPENSES 819000 21 CONTRIBUTION MARGIN 234000 LESS FIXED EXPENSES 240000 NET OPERATING INCOME -6000 Contribution Margin ratio= 22.22%

• The management of Bayside Company is considering whether one

  456886 The management of Bayside Company is considering whether one of the department's in its retail store should be eliminated. The contribution margin in the department is $150,000 per year.

• Managerial accounting: classify costs, compute breakeven, CV

  Fixed Operating Sold Price Costs / Unit Margin Costs Income (Loss) 4,250 (g)__15.60____ $ 9.20 $27,200 $ 22,100 (h)__5,100___ Operating Income = Total Contribution Margin - Fixed Costs = 27,200 - 22,100

• Managerial Accounting

  Similarly, a 10% drop in sales of Kitchen Department will result in a 10% loss of contribution margin.

• Concept of Contribution Margin in CVP analysis

  Discussion teases apart the distinction between financial income statement and contribution margin income statement and how each contributions a different view of the organization.

• Income Statement - Robert's House of Formals

  Contribution margin lost if the department is dropped... $300,000 Less avoidable fixed costs: Salaries and wages...

• CVP questions

  Multiply the expected increase in sales of 20% for 2009 by the ratio of contribution margin to operating income for 2008 computed in requirement f for each firm. h.)