$2.$ Management is surprised by the handbag product line$$s poor showing and would like to have the product line segmented by market. The following information is available about the markets in which the handbag line is sold:

Handbag Markets

Domestic Foreign

Sales R $340,000$ R $85,000$

Traceable fixed expenses:

Advertising R $54,000$ R $76,000$

Variable expenses as a percentage of sales $50\%75\%$

All of the handbag product line$$s selling and administrative expenses and depreciation are common to the markets in which the product is sold. Prepare a contribution format segmented income statement for the handbag product line with segments defined as markets. $3.3.$ Refer to the statement prepared in $(1)$ above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A marketing study indicates that such a campaign would increase sales of the Garments product line by R$214,000$ or sales of the shoes product line by R$159,000.$ The campaign would cost R$44,000.$

a$.$ Compute the increased operating income for these product lines for the expected increased sales.

b$.$ Based on the above results, which product line should be chosen?

multiple choice

Garments

Shoes