Bonus # 6 - Chapter 12

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Problem 12-44 Prepare Segmented Income Statement; Contribution-Margin Format; Retail (LO 12-5)

Buckeye Department Stores, Inc., operates a chain of department stores in Ohio. The companys organization chart appears below. Operating data for 20x5 follow.

BUCKEYE DEPARTMENT STORES, INC. Operating Data for 20x5 (in thousands)
	Columbus Division
	Olentangy Store	Scioto Store	Downtown Store	Cleveland Division (total for all stores)
Sales revenue	$	5,000		$	2,600		$	14,000		$	24,000
Variable expenses:
Cost of merchandise sold		2,000			2,200			7,000			13,000
Sales personnelsalaries		400			320			760			1,600
Sales commissions		50			40			80			240
Utilities		80			60			180			320
Other		70			25			150			290
Fixed expenses:
Depreciationbuildings		120			80			260			510
Depreciationfurnishings		90			50			170			330
Computing and billing		30			30			85			200
Warehouse		80			60			230			490
Insurance		30			15			80			240
Property taxes		25			10			70			210
Supervisory salaries		150			100			440			950
Security		30			30			70			250

The following fixed expenses are controllable at the divisional level: depreciationfurnishings, computing and billing, warehouse, insurance, and security. In addition to these expenses, each division annually incurs $50,000 of computing costs, which are not allocated to individual stores.

The following fixed expenses are controllable only at the company level: depreciationbuilding, property taxes, and supervisory salaries. In addition to these expenses, each division incurs costs for supervisory salaries of $140,000, which are not allocated to individual stores.

Buckeye Department Stores incurs common fixed expenses of $130,000, which are not allocated to the two divisions. Income-tax expense for 20x5 is $1,980,000.

Required:

1.	Prepare a segmented income statement for Buckeye Department Stores, Inc.(Enter your answers in thousands.)
	PLEASE PUT THE ANSWER FOR THIS QUESTION IN A INCOME STATEMENT LIKE THE PHOTOS ATTACHED.

2.	How would the segmented income statement help the president of Buckeye Department Stores manage the company?
	It would help to gain insight into the performance of the individual stores and their divisions. It helps to reallocate fixed expenses based on contribution margins of each segment. It helps to ascertain the profitability of each division, which is more important than the rate of return on investment of the various segments.

References eBook & Resources ProblemDifficulty: Hard Problem 12-44 Prepare Segmented Income Statement; Contribution-Margin Format; Retail (LO 12-5)Learning Objective: 12-05 Prepare a segmented income statement.Check my work

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