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EXERCISES 13-1,13-2 and 13-6
Isabela P Parungao
EXERCISE 13-1 Royal Lawncare Company produces and sells two packaged
products, Weedban and Greengrow. Revenue and cost information relating to the products follow:
Common fixed expenses in the company total $33,000 annually. Last year the company produced and sold 15,000 units of Weedban and 28,000 units of Greengrow.
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EXERCISE 13-1
CONTRIBUTION FORMAT INCOME STATEMENT
*Weedban: 15,000 units × $6 per unit = $90,000 Greengrow: 28,000 units × $7.50 per unit = $210,000
EXERCISE 13-2
Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below:
EXERCISE 13-6
Meiji Isetan Corp., of Japan, has two regional divisions with headquarters in Osaka and Yokohama.
2. Minimum required rate of return is 15%
3. Is Yokohama’s greater amount of residual income an indication that it is better managed?
• No, the Yokohama Division is simply larger than the Osaka Division.
• Residual income can’t be used to compare the performance of divisions of different sizes
• In this case, the Yokohama Division does not appear to be as well managed as the Osaka Division