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1 Question 4 Segmented Income Statement (14 Marks) 2. Armadale Company manufactures and sells three video game consoles: The Alpha X, the Beta Y and the Gamma Z game systems. Information for each product is shown below: 3 Beta 4 Gamma 100.00 S Alpha 80.00 $ S 50.00 5 Sales price 15,000 5,000 2,500 6 Sales volume (units) S 60.00 $ 40.00 $ 15.00 7 Variable cost per unit $ 90 000 $ 210,000 $ 50,000 8 Annual traceable fixed expenses $450,000 9 10 Total Fixed Expenses for Armadale Company 11 12 WORKSPACE ONLY: NO MARKS FOR YELLOW AREA 13 Sales Gamma Alpha Beta Total 14 Variable costs 15 Contribution Margin 16 Traceable fixed expenses 17 Segment Margin 18 Common fixed expenses 19 Net Operating Income 20 21 Answer the following questions: 19 Net Operating Income 20 21 Answer the following questions: 22 Part A: a. What is the contribution margin ratio of each product line (3 marks): 23 24 25 d. Which segment should be dropped, if any based on quantitative analysis alone? (1 mark) a. Alpha b. Beta Gamma Alpha Beta c. Gamma d. None, all segments should be kept 26 Contribution margin ratio (percentage) 27 28 29 b. What is the segment margin (in dollars) of each product line (3 marks): e. What are the common fixed expenses of the company as a whole? (2 marks) 30 31 Gamma Alpha Beta **SCROLL DOWN FOR PART B** 32 Segment margin 35 c. If the company can sell one more unit of product, which system should 6 they sell to maximize income? (1 mark) PART B: The sales manager of Armadale Company thinks that sales of Beta would increase if they spend funds on an advertising campaign. Assuming his prediction is accurate, calculate the following: (4 marks) 7 03 21 02 04 05 Formulas + Cover Sheet Give feedback to alculation Mode: Automatic Workbook Statistics PART B: The sales manager of Armadale Company thinks that sales of Beta would increase if they spend funds on an advertising campaign. Assuming his prediction is accurate, calculate the following: (4 marks) $ 50,000 Increase in Beta sales $ 40,000 Amount spent on advertising Increase in income Increase in expenses Net Increase (decrease) in income Would you recommend that the sales manager proceed with the advertising campaign? (Yes or No) Give Feedback to Microsoft hp and home delete

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