PREPARING A SEGMENTED INCOME STATEMENT Trendy Inc. produces high-end sweaters and jackets in a single factory. The following information was provided for the coming year.

Sweaters Jackets Sales $300,000 $420,000 Variable cost of goods sold 180,000 200,000 Direct fixed overhead 25,000 40,000 A sales commission of 5 percent of sales is paid for each of the two product lines.

Direct fixed selling and administrative expense was estimated to be $20,000 for the sweater line and $50,000 for the jacket line.

Common fixed overhead for the factory was estimated to be $45,000; common selling and administrative expense was estimated to be $15,000.

Required:

Prepare a segmented income statement for Trendy Inc. for the coming year, using variable costing.

Cornerstone Exercise