Maurice Tutor

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Teaching Since: May 2017
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  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 09 Jan 2018 My Price 9.00

intensive advertising campaign

EXERCISE 6–15 Working with a Segmented Income Statement [LO4]

Refer to the data in Exercise 6–14. Assume that Dallas’ sales by major market are as follows:

 

 

 

 

 

Sales . . . . . . . . . . . . . . . . . .  .

$600,000

 

100%

$400,000

 

100%

$200,000

 

100%

Variable expenses  . . . . . . . . .

360,000

 

60

260,000

 

65

100,000

 

50

Contribution margin  . . . . . . . .

240,000

 

40

140,000

 

35

100,000

 

50

Traceable fixed expenses . . . .

72,000

 

12

20,000

 

5

52,000

 

26

Market segment margin . . . . .

168,000

 

28

$120,000

 

30%

$  48,000

 

24%

Common fixed expenses

not traceable to markets . . .

 

18,000

 

 

3

 

 

 

 

 

 

Office segment margin . . . . . .

$150,000

 

25%

 

 

 

 

 

 

 

The company would like to initiate an intensive advertising campaign in one of the two markets during the next month. The campaign would cost $8,000. Marketing studies indicate that such a campaign would increase sales in the construction market by $70,000 or increase sales in the land- scaping market by $60,000.

Required:

1.       In which of the markets would you recommend that the company focus its advertising cam- paign? Show computations to support your answer.

2.       In Exercise 6–14, Dallas shows $90,000 in traceable fixed expenses. What happened to the

$90,000 in this exercise?

 

 

 

 

 

 

 

Answers

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Status NEW Posted 09 Jan 2018 04:01 PM My Price 9.00

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