Reference no: EM133044753

Problem - Terrific Threads is an upscale boutique that operates various stores throughout Florida. The company, which has three divisions (Miami, Naples, and Tampa), reported the following information for the year Just ended (in thousands):

	Miami	Naples	Tampa
Sales revenue	$19,000	$16,000	$18,375
Divisional contribution margin	11,400	9,400	8,500
Profit margin controllable by division manager	6,500	6,900	6,000
Divisional profit margin	6,000	1,700	1,200

Terrific Threads also reported $1,600 of common fixed expenses that top management wants to allocate to the divisions on the basis of sales revenue. As the company's chief executive officer notes, "Each division helped to incur a portion of these costs and, as a result, each should absorb its fair share." The firm has adopted various responsibility accounting procedures to evaluate division personnel.

Required -

A. Compute the company's total sales revenue.

B. Calculate the amount of variable operating expense Incurred by the Naples Division.

C. Calculate the fixed costs controllable by Miami's management.

D. Calculate the fixed costs traceable to the Tampa Division but controllable by others.

F. If the company follows the desires of top management, how much of the common fixed expenses would be allocated to the Tampa Division?

G. Do cost allocations such as those in part "F" typically appear on a segmented income statement?