Part III Dragon Inc. is a manufacture of kitchen equipments and currently has tw
ID: 2535290 • Letter: P
Question
Part III Dragon Inc. is a manufacture of kitchen equipments and currently has two departments: oven department and kitchen fan department. The company's contribution format income statement is as follows Sales Less: Variable expenses Contribution margin Less: Fixed expenses Net operating income The oven department has sales of $4,310,000 and variable expenses of $1,145,000. The remaining sales and variables expenses are for the kitchen fan department. There are $670,000 fixed expenses traceable to the oven department and $480,000 fixed expenses traceable to the kitchen fan department. The remaining are common fixed expenses $6,257,000 $2.365,000 $3,892,000 $1,320,000 $2,572,000 Required 1) Prepare contribution format segmented income statements for the two departments. (5 Marks) Based on the calculation above, what suggestion to the company would you like to make? (2 Marks) 2)Explanation / Answer
Answer:-
Dragon Inc. Contribution format segmentd income statment Particulars Oven department Kitchen fan department Company as a whole $ $ Sales 4310000 1947000 6257000 Less:- Variable costs 1145000 1220000 2365000 Contribution 3165000 727000 3892000 Less:-Traceble fixed expenses 670000 480000 1150000 Segment margin 2495000 247000 2742000 Less:- Common fixed expenses 170000 Net Opreting income 2572000