Valley Incorporated has three divisions, Almond, Grover and Oak. The following is the contribution margin...
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Accounting
Valley Incorporated has three divisions, Almond, Grover and Oak. The following is the contribution margin income statement for the previous year:
| Almond | Grover | Oak | Total | |
|---|---|---|---|---|
| Sales revenue | $ 500,000 | $ 275,000 | $ 225,000 | $ 1,000,000 |
| Variable costs | 175,000 | 125,000 | 100,000 | 400,000 |
| Contribution margin | $ 325,000 | $ 150,000 | $ 125,000 | $ 600,000 |
| Fixed costs | 275,000 | 151,250 | 123,750 | 550,000 |
| Net operating income (loss) | $ 50,000 | $(1,250) | $ 1,250 | $ 50,000 |
Of the fixed costs, $300,000 are common costs that are allocated equally to the three divisions.
Required:
- How much does Grover Division have in direct fixed costs?
- What is Grover Division's segment margin?
- What would Valley's net income (loss) be if the Grover Division were dropped?
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