Calculate the rate per square foot for warehousing

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Reference no: EM13940718

Preparing performance reports for responsibility centers-

Jalapenos! is based in Pleasant Hill, California. The merchandising company has three divisions: Clothing, Food, and Spices. The Clothing division has two main product lines: T-shirts and Sweatshirts. The company uses a shared warehousing facility. There are $50,000 in fixed warehousing costs each month, of which $40,000 are traceable to the three divisions based on the amount of square feet used. There is 100,000 square feet of warehouse space in the facility. The clothing division uses 60,000 square feet of the space, but 5,000 of that space isn't traceable to t-shirts or sweatshirts. Facts related to the divisions and products for the month ended October 31, 2012, follow:

 

Clothing

 

Food

Spices

 

T-shirts

Sweatshirts

 

 

Square feet used . . . . . . . . . . . . . . . . .

40,000

15,000

30,000

10,000

Sales revenue . . . . . . . . . . . . . . . . . . .

$300,000

$100,000

$150,000

$80,000

COGS (variable) . . . . . . . . . . . . . . . . .

$210,000

$ 60,000

$ 60,000

$32,000

Fixed selling expenses . . . . . . . . . . . . .

$ 7,000

$ 5,000

$ 3,000

$ 1,000

Variable selling expenses . . . . . . . . . .

$ 9,000

$ 8,500

$ 11,000

$ 2,500

Requirements

1. Calculate the rate per square foot for Warehousing. Calculate the traceable fixed costs for each division and for each product in the Clothing division.

2. Prepare an income statement for the company using the contribution margin approach. Calculate net income for the company, divisional segment margin for both divisions, and product segment margin for both products.

Reference no: EM13940718

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