The following selected data relate to the Ohio Division of Midwest Industries (MWI):

Required:
A. Compute the following for the Ohio Division:
1. Segment contribution margin.
2. Controllable profit margin.
3. Segment profit margin.
B. Which of the three preceding measures should be used when evaluating the Ohio Division as an investment of MWI's resources? Why?
C. Assume that management made the decision to prepare a segmented income statement that reflected Ohio's five operating departments. Would all $1,120,000 of the controllable fixed costs be easily traced to the departments? Briefly explain.
D. Which of the five-dollar amounts presented in the body of the problem would be used in computing the income before taxes of MWI?

Question

The following selected data relate to the Ohio Division of Midwest Industries (MWI):
  
Required: 
A. Compute the following for the Ohio Division:
1. Segment contribution margin.
2. Controllable profit margin.
3. Segment profit margin.
B. Which of the three preceding measures should be used when evaluating the Ohio Division as an investment of MWI's resources? Why?
C. Assume that management made the decision to prepare a segmented income statement that reflected Ohio's five operating departments. Would all $1,120,000 of the controllable fixed costs be easily traced to the departments? Briefly explain.
D. Which of the five-dollar amounts presented in the body of the problem would be used in computing the income before taxes of MWI?

Quizplus · Accepted Answer

The Answer of The following selected data relate to the Ohio Division of Midwest Industries (MWI):
  
Required: 
A. Compute the following for the Ohio Division:
1. Segment contribution margin.
2. Controllable profit margin.
3. Segment profit margin.
B. Which of the three preceding measures should be used when evaluating the Ohio Division as an investment of MWI's resources? Why?
C. Assume that management made the decision to prepare a segmented income statement that reflected Ohio's five operating departments. Would all $1,120,000 of the controllable fixed costs be easily traced to the departments? Briefly explain.
D. Which of the five-dollar amounts presented in the body of the problem would be used in computing the income before taxes of MWI?

The Following Selected Data Relate to the Ohio Division of Midwest