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Marple Associates - advertising campaign - 3 Jul, 2012

Ex 12-12

 

Marple Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two offices-one in Houston and one in Dallas. The firm classifies the direct costs of consulting jobs as variable costs.

 

Assume that Dallas' sales by major market are as follows:

 

 

Dallas

Construction

 Landscaping

 

 

Clients

 

Clients

 

Sales

    600,000

 400,000

100%

      200,000

        100

Variable expenses

    360,000

 260,000

65

      100,000

         50

Contribution margin

    240,000

 140,000

35

      100,000

         50

Traceable fixed expenses

      72,000

   20,000

5

       52,000

         26

market segment margin

    168,000

 120,000

30

       48,000

         24

Common expenses

      18,000

 

 

 

 

Office segment margin

    150,000

 

 

 

 

 

 The company would like to initiate an intensive advertising campaign in one of the two markets during the next month. The campaign would cost $8,000. Marketing studies indicate that such a campaign would increase sales in the construction market by $70,000 or increase sales in the landscaping market by $60,000.

 

Required:

 

1a. Calculate the increased segment margin.

 

1b. In which of the markets would you recommend that the company focus its advertising campaign?

 

2. In Exercise 12-11, Dallas shows $90,000 in traceable fixed expenses. What happened to the $90,000 in this exercise?



Category : Management Accounting

Search Keywords :
Marple , Associates , Dallas , Construction , Landscaping , Advertising , Campaign , Segment , Margin 


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Answer  - 3 Jul, 2012
Please see the doc attachment....


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