Bender Company is evaluating its three divisions, the North American Division, the South American Division...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Bender Company is evaluating its three divisions, the North American Division, the South American Division and the European Division. The following financial information is for the consolidated company: Revenues $10,600,000 Variable costs 4,240,000 Contribution margin 6,360,000 Fixed costs 6,000,000 Net income 360,000 During 2014 revenues for the three segments were $3,200,000, $2,900,000 and $4,500,000 respectively. Variable costs for all three segments were 40%. Fixed costs of $2,000,000 have been assigned to each segment. 85% of the North American fixed costs are traceable, 70% of the South American fixed costs are traceable and 90% of the European fixed costs are traceable. Required: 1. Prepare a segmented income statement showing the details for the divisions and the company as a whole. 2. Should any of the divisions be considered for elimination? Explain. 3. Based on the segmented income statement, identify specific items that management should investigate further.
Bender Company is evaluating its three divisions, the North American Division, the South American Division and the European Division. The following financial information is for the consolidated company:
Revenues $10,600,000
Variable costs 4,240,000
Contribution margin 6,360,000
Fixed costs 6,000,000
Net income 360,000
During 2014 revenues for the three segments were $3,200,000, $2,900,000 and $4,500,000 respectively. Variable costs for all three segments were 40%. Fixed costs of $2,000,000 have been assigned to each segment. 85% of the North American fixed costs are traceable, 70% of the South American fixed costs are traceable and 90% of the European fixed costs are traceable.
Required:
1. Prepare a segmented income statement showing the details for the divisions and the company as a whole.
2. Should any of the divisions be considered for elimination? Explain.
3. Based on the segmented income statement, identify specific items that management should investigate further.
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.