Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Vega Foods, Inc., has recently purchased a small mill that it intends to operate as one of its subsidiaries. The newly acquired mill has three products that it offers for sale-wheat cereal, pancake mix, and flour. Each product sells for $10 per package. Materials, labor, and other variable production costs are $4.90 per bag of wheat cereal, $6.10 per bag of pancake mix, and $3.10 per bag of flour. Sales commissions are 10% of sales for any product. All other costs are fixed.
The mill's income statement for the most recent month is given below:


Product Line
Total
Company Wheat
Cereal Pancake
Mix Flour
Sales $ 1,170,000 $ 390,000 $ 490,000 $ 290,000

Expenses:
Materials, labor, and other 579,900 191,100 298,900 89,900
Sales commissions 117,000 39,000 49,000 29,000
Advertising 156,050 73,000 50,000 33,050
Salaries 98,500 43,300 10,200 45,000
Equipment depreciation 58,500 19,500 24,500 14,500
Warehouse rent 23,400 7,800 9,800 5,800
General administration 84,000 28,000 28,000 28,000

Total expenses 1,117,350 401,700 470,400 245,250

Net operating income (loss) $ 52,650 $ (11,700) $ 19,600 $ 44,750


The following additional information is available about the company:


a.The same equipment is used to mill and package all three products. In the above income statement, equipment depreciation has been allocated on the basis of sales dollars. An analysis of equipment usage indicates that it is used 40% of the time to make wheat cereal, 50% of the time to make pancake mix, and 10% of the time to make flour.

b.All three products are stored in the same warehouse. In the above income statement, the warehouse rent has been allocated on the basis of sales dollars. The warehouse contains 46,800 square feet of space, of which 8,000 square feet are used for wheat cereal, 14,000 square feet are used for pancake mix, and 24,800 square feet are used for flour. The warehouse space costs the company $0.50 per square foot per month to rent.

c.The general administration costs relate to the administration of the company as a whole. In the above income statement, these costs have been divided equally among the three product lines.

d.All other costs are traceable to the product lines. Vega Foods' management is anxious to improve the mill's 4.50% margin on sales.

Required:
1.Prepare a new contribution format segmented income statement for the month. Adjust the allocation of equipment depreciation and warehouse rent as indicated by the additional information provided. (Input all amounts as positive values except losses which should be indicated by a minus sign. Round your final answers to the nearest dollar amount.)

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M940536

Have any Question? 


Related Questions in Accounting Basics

Group assignment - group report on e-business website

Group Assignment - Group Report on E-Business Website Evaluation Learning outcomes- 1. Define electronic commerce and describe emerging online technologies and trends and their influence on the electronic commerce market ...

Question -owing to low liquidity lisa ltd decides on 1 july

Question - Owing to low liquidity, Lisa Ltd decides on 1 July 2015 to sell its land and buildings to Anderson Ltd. The carrying values of the land and buildings in the books of Lisa Ltd, at 1 July 2015, are: Land at Cost ...

Problem cost behavior high-low method contribution format

PROBLEM Cost Behavior; High-Low Method; Contribution Format Income Statement Morrisey & Brown, Ltd., of Sydney is a merchandising company that is the sole distributor of a product that is increasing in popularity among A ...

Tim and jill taylor are retiring this year tim has worked

Tim and Jill Taylor are retiring this year! Tim has worked for a utility company since his co-op job in college and has participated in all of the company's retirement savings plans. Jill has worked since their kids were ...

Computer problem- computer taxkerry dodson owns and

Computer Problem- Computer Tax Kerry Dodson owns and operates an income tax preparation service and is trying to determine his rates for 2015. Last year Kerry decided to work with a local bank that processes returns dire ...

Accountingmoviesplus inc is in its third year of business

Accounting MoviesPlus, Inc. is in its third year of business. The company offers DVD rental to online customers for a fixed monthly fee. For $20 per month, a customer receives three DVDs each month, one at a time as the ...

Fill in the amounts for x y and z in the following table

Fill in the amounts for X, Y, and Z in the following table. (The company started business on January 1, 2009 31-Dec-09 31-Dec-10 Assets $4,750 $5,350 Liabilites 2150 $1,400 Cantributed Capital $1,200 $1,200 Retained earn ...

The morgan family lives in massachusetts they moor their

The Morgan family lives in Massachusetts. They moor their sailboat in Rhode Island. What might be a plausible reason for the possible inconvenience? Is the breadth and number of Federal excise taxes increasing or decreas ...

Practice questionswhy is a balance sheet claimed to be a

Practice questions: Why is a balance sheet claimed to be a statement of the financial position of a business? What limitations do you think it has?

Accounting information systems assignmentthe processes of

ACCOUNTING INFORMATION SYSTEMS ASSIGNMENT: The processes of selecting an AIS/ERP to make informed decision for investment in an accounting software. Group Assignment Scenario B Bakery is a family owned firm with around 7 ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate