13-23 Companhia Bradesco, S.A, of Brazil, an industrial supply stoee chain, has two divisiones. The company's contribetion format income statement segmented by divisions for lastt year is piven helow (the cumency in Braril is the real, denoted here by R Division Total Plastics Company Glass Sales Variabie expences R1500,000 RRO0 000 Re00000 300.000 300.000 700.000 400000 Contibution margin 800.000 500.000 Traceable fed expences Advertising Depreciation Adminitation 300,000 180 000 120000 140,000 92000 000 220.000 118.000 102.000 660,000 Total 390 000 270.000 R 30,000 Divisional segment margin Common fixed expences R110000 140,000 100.000 R 40000 Net operating ineome Top managemeat doesa't undentand why the Glass Division has such a low segmat margin when its sales are only cne-third less than sales in the Plastics Division Accondingly, manapement has dinected that the Glass Division be further sepmented into peoduct lines. The following information is available on the product lines in the Glass Division Glass Division Product Lines Flat Auto Speciality Glass Glass Glass Saes Traceable faed epense Adverticing Depreciation Administration R200,000 R300.000 R100.000 R30.000 R10000 R14.000 R42.000 R24000 R48.000 R14000 R21.000 RT000 Variable apances as a percentage of sales es% 40% 50% Analysis shows that R0,000 of the Glass Dvision's administration expenses ane common to the product ines Requred 1 Prepare a coatribation format segmeated income statemcnt for the Glass Division with segmeats defined as prodact lines 2. Management is sarprised by Specialty Glass's poor showing and would ike to have the prodact line sepmented by market. The following infomation is available about the two maekets in which Specialty Glass is sold Specialty Glass Markets Domestic Foreign Sales Reo,000 Ra0 000 Traceable fed epenses Advetising Variable expenses as a percentage of sales R18.000 R30.000 s0% so% All of Specialy Glass's depeeciation and administration expenses ae commoe to the markets in which the peoduct is sold. Prepare a coee with segments defined as markets 3. format sepmented income tatement for Specialty Glass Refer to the statement prepanod in (1) above. The sales manager wants to nn a special peomotional campaign on one of the products over the next moeth. A market study indicates that sach a campaign woeld increase sales of Flat Glass by R40,000 or sales of Auto Glass by R30,000. The campaign would cost R8,00o Show computations to determine which prodact line should be chosen #13-23 Companhia Bradesco, S.A., of Brazil, an industrial supply store chain, has two divisions. The company's contribution format income statement segmented by divisions for last year is given below (the currency in Brazil is the real, denoted here by R): Division Total Company Plastics Glass R900,000 400,000 Sales R1,500,000 R600.000 Variable expences 700,000 300.000 Contribution margin Traceable fixed expenses: Adverticing Depreciation 800,000 500,000 300,000 300,000 180,000 120,000 140,000 92.000 48,000 Adminictration 220,000 118,000 102.000 Total 660.000 390,000 270,000 R110.000 Divisional segment margin Common fixed expences R 30,000 140.000 100,000 R 40,000 Net operating income Top management doesn't understand why the Glass Division has such a low segment margin when its sales are only one-third less than sales in the Plastics Division. Accordingly, management has directed that the Glass Division be further segmented into product lines. The following information is available on the product lines in the Glass Division: Glass Division Product Lines Flat Auto Specialty Glass Glass Glass Sales R200,000 R300,000 R100,000 Traceable fixed expenses: Adverticing Depreciation R30,000 R42.000 R48,000 R10,000 R24,000 R14,000 R14,000 R21,000 R7,000 Adminictration Variable expenses as a percentage of cales 65% 50% Analysis shows that R60,000 of the Glass Division's administration expenses are common to the product lines Required: I. Prepare a contribution format segmented income statement for the Glass Division with segments defined as product lines. 2. Management is surprised by Specialty Glass's poor showing and would like to have the product line segmented by market. The following information is available about the two markets in which Specialty Glass is sold: Specialty Glass Markets Domestic Foreign R40,000 R60,000 Sales Traceable fixed expenses: Adverticing Variable expensec as a percentage of calec R18,000 R30,000 50% 50% All of Specialty Glass's depreciation and administration expenses are common to the markets in which the product is sold. Prepare a contribution format segmented income statement for Specialty Glass with segments defined as markets Refer to the statement prepared in (1) above. The sales manager wants to run a special promotional campaign on one of the products over the next month. A market study indicates that such a campaign would increase sales of Flat Glass by R40,000 or sales of Auto Glass by R30,000. The campaign would cost R8,000. Show computations to determine which product line should be chosen. 3