Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 11

For the following questions, circle the best response.

Zona Company’s income statement for 2010 for Brands A and Z and for the company as a whole follows:

	Total	Brand A	Brand Z
Sales	$450,000	$250,000	$200,000
Variable expenses	(322,000)	(160,000)	(162,000)
Contribution margin	$128,000	90,000	38,000
Direct fixed expenses	(53,000)	(22,000)	(31,000)
Segment margin	$ 75,000	$ 68,000	$ 7,000
Common fixed expenses	(45,000)
Operating Income	$ 30,000

If Brand Z’s sales increase by $25,000 and its direct fixed expenses increase by $3,000, operating income for the company as a whole would increase by

a. $875.

b. $1,167.

c. $1,750.

d. $4,167.

e. $1,900.

Step 1 of 5

Cost Analysis for Control:

Cost Analysis can be simply referred to the tool which is used by the companies for bifurcating the costs incurred into its components and making the detailed analysis on such costs and reporting each of the identified factors. It also involves the comparison of such costs with the standards set by the company.