Problem: Vogel Co. produces three models of heating and air conditioning thermostat components. The following table summarizes data about each model:
|
|
BV19
|
HV41
|
MV12
|
|
Selling price per unit
|
$
|
36
|
$
|
60
|
$
|
30
|
|
|
Contribution margin per unit
|
|
12
|
|
18
|
|
6
|
|
|
Units sold per month
|
|
4,000
|
|
2,000
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
Total contribution margin
|
$
|
48,000
|
$
|
36,000
|
$
|
36,000
|
|
|
Direct fixed expenses
|
|
21,600
|
|
17,100
|
|
24,300
|
|
|
|
|
|
|
|
|
|
|
|
Segment margin
|
$
|
26,400
|
$
|
18,900
|
$
|
11,700
|
|
|
Allocated company fixed expenses
|
|
10,000
|
|
5,000
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
$
|
16,400
|
$
|
13,900
|
$
|
(3,300
|
)
|
Required to do:
Q1. On what basis does the $30,000 of company fixed expenses appear to be allocated?
Q2. Calculate the effect on total company net income if the MV12 model were discontinued. (Omit the "$" sign in your response.)
Q3. Calculate the contribution margin ratio for each model. (Round your answers to 1 decimal place. Omit the "%" sign in your response.)
Q4. If an advertising campaign focusing on a single model were to result in an increase of 5,000 units in the quantity of units sold, which model should be advertised?
Q5. If an advertising campaign focusing on a single model were to result in an increase of $15,000 in revenues, which model should be advertised?