The Following Selected Data Relate to the Ohio Division of Midwest

question 33

Essay

The following selected data relate to the Ohio Division of Midwest Industries (MWI):

Required:
A. Compute the following for the Ohio Division:
1. Segment contribution margin.
2. Controllable profit margin.
3. Segment profit margin.
B. Which of the three preceding measures should be used when evaluating the Ohio Division as an investment of MWI's resources? Why?
C. Assume that management made the decision to prepare a segmented income statement that reflected Ohio's five operating departments. Would all $1,120,000 of the controllable fixed costs be easily traced to the departments? Briefly explain.
D. Which of the five-dollar amounts presented in the body of the problem would be used in computing the income before taxes of MWI?

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Definitions:

Tax Shelters

Financial strategies or investments that minimize or avoid taxes legally, often used by individuals and corporations.

Ashoka

An international organization that supports social entrepreneurs with innovative solutions to societal problems.

Social Entrepreneurs

Entrepreneurs who establish enterprises with the primary goal of solving social problems or effecting social change, using business principles to achieve their objectives.

Accountability

The obligation of an organization or individual to account for their activities, accept responsibility for them, and disclose the results in a transparent manner.