Omstadt Corporation produces and sells only two products that are referred to as RIPS and PITS. Production is "for order" only, and no finished goods inventories are maintained; work in process inventories are negligible. The following data relate to last month's operations:??RIPSPITS?Sales$180,000$180,000?Manufacturing costs:???Materials$18,000$24,000?Direct labor$54,000$48,000?Overhead$72,000$84,000?Selling expenses$14,400$10,080?Administrative expenses$12,000$18,000$36,000 of the manufacturing overhead assigned to RIPS and $72,000 of that assigned to PITS is fixed. The balance of the overhead is variable. Selling expenses consist entirely of commissions paid as a percentage of sales. Direct labor is completely variable. Administrative expenses are fixed and cannot
be traced to the products but have been arbitrarily allocated to the products.Required:Prepare a segmented income statement, in total and for the two products. Use the contribution approach.
What will be an ideal response?
| ? | ? | Total Company | RIPS | PITS |
| ? | Sales | $360,000 | $180,000 | $180,000 |
| ? | Variable expenses: | ? | ? | ? |
| ? | Materials | 42,000 | 18,000 | 24,000 |
| ? | Direct labor | 102,000 | 54,000 | 48,000 |
| ? | Manufacturing overhead | 48,000 | 36,000 | 12,000 |
| ? | Selling expense | 24,480 | 14,400 | 10,080 |
| ? | Total variable expenses | 216,480 | 122,400 | 94,080 |
| ? | Contribution margin | 143,520 | 57,600 | 85,920 |
| ? | Fixed expenses: | ? | ? | ? |
| ? | Manufacturing overhead | 108,000 | 36,000 | 72,000 |
| ? | Segment margin | 35,520 | $21,600 | $13,920 |
| ? | Common expense: | ? | ? | ? |
| ? | Administrative expense | 30,000 | ? | ? |
| ? | Net operating income | $5,520 | ? | ? |
You might also like to view...
A check authorization is a document that permits the issuance of a check to pay an invoice
Indicate whether the statement is true or false
Promotional mixes do not vary from one product or industry to the next
Indicate whether the statement is true or false a. True b. False
Setting greater pay differentials at the top of the pay structure is based on:
A. institutional theory B. tournament theory C. equity theory D. marginal utility theory E. marginal productivity theory
The Garrett Company uses the perpetual inventory system. The company's records showed a book balance of $18,000 in the Merchandise Inventory account, and a physical count finds only $16,250 of inventory. Which of the following indicates the effect of the necessary write-down entry? Asset=Liab.+Stk.EquityRev.-Exp.=Net Inc.Stmt ofCash FlowsA.(1,750) NA (1,750)NA 1,750 (1,750)NAB.NA 1,750 (1,750)NA 1,750 (1,750)NAC.16,250 NA 16,25016,250 NA 16,25016,250 IAD.(18,000) NA (18,000)(18,000) NA (18,000)NA
A. Option A B. Option B C. Option C D. Option D