1)
What is the process and how I can solve this question please!
Bovine Company, a wholesale distributor of DVD’s, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement below:
Sales…….$1,500,000
Variable expenses…..588,000
Contribution margin……912,000
Fixed Expenses………..945,000
Net Operating Loss……$ (33,000)
In an effort to isolate the problem, the president has asked for an income statement segmented by geographical market. Accordingly, the Accounting Department has developed the following data:
Geographic Market
South………….Central…………..North
Sales……………………………….$400,000………$600,000……….$500,000
Vairiable expenses as a percentage
of sales…………………………….. 52%……………. 30%…………….40%
Traceable fixed expenses…….$240,000…………$330,000………..200,000
2) How do we calculate the solution? also if the company sales manager believes that sale in the Central geog market could increase 15% if monthly advertising were increased by $25,000. Would you recommend the increase advertisement? Show the computation