Victoria Falls Flour Mill Company started many years ago producing a single product. It has grown to produce many diverse consumer products ranging from foods to paper goods.
| Victoria Falls Flour Mill Company started many years ago producing a single product. It has grown to produce many diverse consumer products ranging from foods to paper goods. Currently, the corporation is barely making a profit, and the price of its stock has languished. Division managers have traditionally been incentivized with stock options and awards. However, management is evaluating a new bonus plan based on segment profits within each division. Below are 20X4 facts about the Sugar Products Division, which generates 10% of overall corporate revenue. The Sugar Products Division has two key products – raw sugar and candy. | |||
| Total sales of raw sugar and candy | $ 45,750,000 | ||
| Traceable, controllable, sugar division fixed costs | 10,250,000 | ||
| Traceable, uncontrollable, sugar division fixed costs | 3,600,000 | ||
| Non-traceable, controllable, sugar division fixed costs | 1,500,000 | ||
| Non-traceable, uncontrollable, sugar division fixed costs | 1,750,000 | ||
| Variable selling, general, & administrative costs | 9,050,000 | ||
| Variable product costs | 21,700,000 | ||
| General corporate expenses for all divisions | 8,000,000 | ||
| Prepare a contribution income statement for the aggregated Sugar Division (one column). If the division manager is to be evaluated on controllable contribution margin, would the Sugar Division manager appear to be entitled to a bonus? |
| 20X4 Divisional Report for Sugar Products | |||
| Contribution Income Statement | |||
| Sales | $ 45,750,000 | ||
| Less: | |||
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