1. Two segments (Mountain Bike and Road Bike) showed the following data for the most recent year:
| |
Mountain Bike |
Road Bike |
| Contribution to indirect expenses |
840,000 |
504,000 |
| Assets with directly used by and identified with the segment |
2,520,000 |
2,184,000 |
| Sales |
3,360,000 |
6,720,000
|
a. Calculate return on investment for each segment in the most direct manner. b. Calculate return on investment using the margin and turnover components.
2. Given the following data, prepare a schedule that shows contribution margin, contribution to indirect expenses, and net income of the Sharks Division of Hockey, Inc.:
Direct fixed expenses $ 425,000
Indirect fixed expenses 325,500
Sales 2,400,000
Variable expenses 1,800,000
What would be the effect on the company income if the segment was eliminated?
3. Three segments (A, B, and C) of Trump Enterprises have net sales of $500,000, $300,000, and $200,000, respectively. A decision is made to allocate the pool of $50,000 of administrative overhead expenses of the home office to the segments, using net sales as the basis for allocation.
a. How much of the $50,000 should be allocated to each segment?
b. If Segment C is eliminated, how much of the $50,000 will be allocated to A and B?