Question

Prairie Electronics, located in Regina, manufactures three product lines: (1) high-end speakers, (2) personal computers, and (3) handheld devices. For 20X5, it compiled the following budgeted data: Total High-End Speakers 300,000 1,700 Personal Computers 510,000 $ 1,210 Handheld Devices 400,000 335 450 430 $ 120 80 Sales (in units) Price (per unit) Variable costs per unit: Direct materials Direct labour Overhead Shipping Sales commissions Direct fixed costs: Salaries Utilities Depreciation Common fixed costs: Corporate salaries Building depreciation Legal & accounting Other $ 52,870,000 35,430,000 50,680,000 $ 63,040,000 49,370,000 101,070,000 $32,760,000 10,160,000 24,570,000 $ 27,170,000 22,660,000 33,600,000 9,210,000 Required: 1. & 2. Prepare a segmented performance report; Compute the contribution margin percentage and segment margin percentage. (Round "Percentage" answers to 1 decimal place, (i.e., 0.123 should be considered as 12.3%).)

Answer 1

PRAIRIE ELECTRONICS Segment Performance Report Profit Centres Total Company High-End Speakers Personal Computers 510,000,000 $ Handheld Devices 617,100,000 $ 134,000,000 1,261,100,000 Sales (a) Less: Variable costs Direct materials 135,000,000 219,300,000 6,000,000 10,000,000 360,300,000 Direct labor 107,200,000 36,000,000 61,200,000 Overhead 24,000,000 56,100,000 20,000,000 100,100,000 Shipping 18,000,000 30,600,000 1,600,000 50,200,000 Sales commissions 21,000,000 35,700,000 1,600,000 58,300,000 Total Variable costs 676,100,000 234,000,000 402,900,000 39,200,000 Contribution Margin (b) Less: Direct fixed costs 94,800,000 $ 585,000,000 276,000,000 $ 214,200,000 $ Salaries 52,870,000 35,430,000 63,040,000 32,760,000 148,670,000 Utilities 94,960,000 49,370,000 10,160,000 Depreciation 50,680,000 101,070,000 24,570,000 176,320,000 Total fixed expenses 213,480,000 67,490,000 138,980,000 419,950,000 137,020,000 $ 27,310,000 $ 165,050,000 $ Segment profit (c) 720,000 Less:Common fixed costs Corporate salaries Building & depreciation Legal & accounting 27,170,000 22,660,000 33,600,000 Other 9,210,000 Total common fixed cost 92,640,000 $ Net Profit 72,410,000 Contribution Margin % (b/a) 54.1% 34.7% 70.7% Segment Margin % (c/a) 0.1% 26.9% 20.4%

Working Notes High-End Speakers Sales (in units) (a) Sales (ax$1,700) Direct materials (ax$ 450) Direct labor (ax $120) Overhead (ax $80) Shipping (a x $60) 300,000 $ 510,000,000 135,000,000 36,000,000 24,000,000 18,000,000 21,000,000 $ Sales commissions (ax $70) Personal Computers Sales (in units) (a) 510,000 Sales (ax$1,210) Direct materials (a x$ 430) Direct labor (a x $120) Overhead (ax $110) Shipping (ax $60) Sales commissions (ax $70) $ 617,100,000 $ 219,300,000 61,200,000 56,100,000 $ 30,600,000 $ 35,700,000 Handheld Devices Sales (in units) (a) 400,000 Sales (ax $ 335) Direct materials (ax$ 15) Direct labor (ax $25) Overhead (a x $50) Shipping (ax $4) Sales commissions (a x $4) $ 134,000,000 6,000,000 10,000,000 20,000,000 $ 1,600,000 1,600,000

3-a PRAIRIE ELECTRONICS Profit Centres High-End Speakers Personal Computers 720,000 $ Total Company Handheld Devices 137,020,000 $ 27,310,000 $ 165,050,000 Segment Profit Less: Common fixed expenses $ Allocated portion (92,640,000/3) 92,640,000 30,880,000 30,880,000 30,880,000 106,140,000 $ (30,160,000) (3,570,000) Net income (loss) 72,410,000