Question

Horatio inc. has three divisions which are operated as profit centers. actual operating data for the divisions listed alphabetically are as follows. (a) compute the missing amounts. operating data women's shoes men's shoes children's shoes contribution margin $337,500 $ (3) $225,000 controllable fixed costs 125,000 (4) (5) controllable margin (1) 112,500 118,750 sales 750,000 562,500 (6) variable costs (2) 400,000 312,500

Answer 1

HORATIO INC.

DIVISIONAL PERFORMANCE STATEMENT

Women's shoes Men's shoe Children's shoe

Sales $750,000 $562,500 (6)$537,500

less: Variable Cost (2) 412,500 400,000 312,500

Contribution margin 337,500 (3) 162,500 225,000

Controllable fixed cost 125,000 (4) 50,000 (5) 106,250

Controllable margin (1) 212,500 112,500 118,750

Workings

1. controllable margin = contribution margin - controllable fixed cost

= 337,500 - 125,000 = 212,500

2. contribution margin = sales - varable cost

337,500 = 750,000 - variable cost

variable cost = 750,000 - 337,500 = 412,500

3. contibution margin = 562,500 - 400,000 = 162,500

4. controllable fixed cost = contribution margin - controllable margin

= 162,500 - 112,500 = 50,000

5. controllable fixed cost = 225,000 - 118750 = 106,250

6. sales = contribution margin + variable cost

= 312,500 + 225,000 = 537,500

Step-by-step explanation: