Old Jeans, Inc. has two divisions or profit centers, one makes regular fit jeans and the other makes relaxed fit jeans. The information for the two centers follows:
$$\begin{array} { | l | r | r | }
\hline & \text { Regular fit } & \text { Relaxed fit } \
\hline \text { Sales } & \$ 400,000 & \$ 175,000 \
\hline \text { Variable cost (as a \% of Sales) } & 40 \% & 50 \% \
\hline \text { Traceable fixed costs } &\$40,000&\$70,000\
\hline
\end{array}$$
There are also common fixed costs of $27,500.
Required:
Prepare a responsibility income statement by profit center and in total.

Question

Old Jeans, Inc. has two divisions or profit centers, one makes regular fit jeans and the other makes relaxed fit jeans. The information for the two centers follows:
$$\begin{array} { | l | r | r | } 
\hline & \text { Regular fit } & \text { Relaxed fit } \
\hline \text { Sales } &  \$ 400,000 & \$ 175,000 \
\hline \text { Variable cost (as a \% of Sales) } & 40 \% & 50 \% \
\hline \text { Traceable fixed costs } &\$40,000&\$70,000\
\hline
\end{array}$$
There are also common fixed costs of $27,500.
Required:
Prepare a responsibility income statement by profit center and in total.

Quizplus · Accepted Answer

The Answer of Old Jeans, Inc. has two divisions or profit centers, one makes regular fit jeans and the other makes relaxed fit jeans. The information for the two centers follows:
$$\begin{array} { | l | r | r | } 
\hline & \text { Regular fit } & \text { Relaxed fit } \
\hline \text { Sales } &  \$ 400,000 & \$ 175,000 \
\hline \text { Variable cost (as a \% of Sales) } & 40 \% & 50 \% \
\hline \text { Traceable fixed costs } &\$40,000&\$70,000\
\hline
\end{array}$$
There are also common fixed costs of $27,500.
Required:
Prepare a responsibility income statement by profit center and in total.

Old Jeans, Inc There Are Also Common Fixed Costs of $27,500