Exercise 10-6

Gillaspie Brothers Outfitters sells equipment to outdoors enthusiasts. Sam Gillaspie, the companys president, just received the following income statement reporting the results of the past year.

Hunting Camping Fishing Total Sales revenue $1,240,000 $3,570,000 $2,351,000 $7,161,000 Variable cost of goods sold 842,000 2,320,500 1,889,600 5,052,100 Fixed cost of goods sold 113,900 185,700 163,700 463,300 Gross profit 284,100 1,063,800 297,700 1,645,600 Variable operating expenses 168,400 571,200 235,100 974,700 Fixed operating expenses 78,600 83,300 72,300 234,200 Common fixed costs 59,500 128,000 96,100 283,600 Operating income ($22,400 ) $281,300 ($105,800 ) $153,100

Sam is concerned that two of the companys divisions are showing a loss, and he wonders if the company should stop selling hunting and fishing gear to concentrate solely on camping gear.

[Partially correct answer.] Your answer is partially correct. Try again.

Prepare a segment margin income statement. Fixed cost of goods sold and fixed operating expenses can be traced to each division. (If the amount is negative then enter with a negative sign preceding the number e.g. -5,125 or parenthesis. e.g. (5,125).)

Hunting Camping Fishing Total [Entry field with correct answer] Traceable Fixed Expenses Contribution Margin Cost of Goods Sold Variable Expenses Operating Expenses Common Fixed Expenses Sales Revenue Operating Income Segment Margin $ [Entry field with correct answer] $ [Entry field with correct answer] $ [Entry field with correct answer] $ [Entry field with correct answer] [Entry field with correct answer] Less Add : [Entry field with correct answer] Sales Revenue Common Fixed Expenses Segment Margin Operating Income Operating Expenses Traceable Fixed Expenses Contribution Margin Cost of Goods Sold Variable Expenses [Entry field with correct answer] Segment Margin Operating Expenses Sales Revenue Operating Income Traceable Fixed Expenses Common Fixed Expenses Contribution Margin Cost of Goods Sold Variable Expenses [Entry field with correct answer] [Entry field with correct answer] [Entry field with correct answer] [Entry field with correct answer] [Entry field with correct answer] Traceable Fixed Expenses Operating Expenses Contribution Margin Segment Margin Cost of Goods Sold Sales Revenue Common Fixed Expenses Variable Expenses Operating Income [Entry field with incorrect answer] [Entry field with incorrect answer] [Entry field with incorrect answer] [Entry field with incorrect answer] [Entry field with correct answer] Contribution Margin Common Fixed Expenses Operating Income Sales Revenue Cost of Goods Sold Variable Expenses Operating Expenses Segment Margin Traceable Fixed Expenses [Entry field with incorrect answer] [Entry field with incorrect answer] [Entry field with incorrect answer] [Entry field with incorrect answer] [Entry field with correct answer] Segment Margin Contribution Margin Operating Income Traceable Fixed Expenses Variable Expenses Operating Expenses Sales Revenue Common Fixed Expenses Cost of Goods Sold [Entry field with correct answer] Traceable Fixed Expenses Operating Expenses Contribution Margin Segment Margin Sales Revenue Common Fixed Expenses Cost of Goods Sold Variable Expenses Operating Income [Entry field with correct answer] [Entry field with correct answer] [Entry field with correct answer] [Entry field with correct answer] [Entry field with correct answer] Segment Margin Contribution Margin Common Fixed Expenses Cost of Goods Sold Variable Expenses Operating Expenses Sales Revenue Traceable Fixed Expenses Operating Income [Entry field with correct answer] [Entry field with correct answer] [Entry field with correct answer] [Entry field with correct answer] [Entry field with correct answer] Traceable Fixed Expenses Contribution Margin Operating Expenses Operating Income Segment Margin Sales Revenue Common Fixed Expenses Cost of Goods Sold Variable Expenses $ [Entry field with incorrect answer] $ [Entry field with incorrect answer] $ [Entry field with incorrect answer] [Entry field with incorrect answer] [Entry field with correct answer] Operating Income Sales Revenue Variable Expenses Segment Margin Traceable Fixed Expenses Common Fixed Expenses Contribution Margin Cost of Goods Sold Operating Expenses [Entry field with correct answer] [Entry field with correct answer] Common Fixed Expenses Segment Margin Operating Expenses Sales Revenue Variable Expenses Cost of Goods Sold Contribution Margin Traceable Fixed Expenses Operating Income $ [Entry field with correct answer]