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Hepras, Inc., has two product lines: routers and ethernet switches. During the current month, the two product lines reported the following results. Routers Switches Sales $ 590,000 $ 990,000 Variable costs (as a percentage of sales) 40 % 45 % Traceable fixed costs $ 250,000 $ 125,000 In addition, fixed costs common to both product lines amounted to $213,000. Prepare an income statement showing percentages as well as dollar amounts. Conclude your statement with income from operations for the business and with the responsibility margin for each product line. (Round percentage answers to 2 decimal place. i.e. 0.1234 should be considered as 12.34%.)

Answer :

anthougo

Answer:

Hepras, Inc

                                       Routers           Switches        Total

Sales                      $ 590,000 100%  $ 990,000 100%   $ 1,580,000  100%

Variable costs

(as a percentage

 of sales)                 236,000  40%       445,500  45 %      681,500 43.13%

Contribution         $354,000   60%       544,500  55%     898,500 56.87%

Traceable

fixed costs             250,000  42.37%   125,000  12.62% 375,000  23.73%

Segment Income $ 104,000   17.63%   419,500  42.37% 523,500  33.13%

Common Fixed costs                                                          213,000   13.48%

Net operating income                                                       $310,500   19.65%

Explanation:

a) Data and Calculations:

                                       Routers           Switches    

Sales                           $ 590,000            $ 990,000

Variable costs

(as a percentage

 of sales)                       40%                     45 %

Variable costs = $236,000 ($590,000*40%)  $445,500 ($990,000*45%)

Traceable

fixed costs                    250,000              125,000

Common Fixed costs  =  $213,000

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