Question
Midtown Retail operates a retail store in Kansas City, MO., and St. Louis, MO. The following information relates to the Kansas City facility: The store
Midtown Retail operates a retail store in Kansas City, MO., and St. Louis, MO. The following information relates to the Kansas City facility:
The store sold 62,800 units at $28.00 each, after having purchased the units from various suppliers for $21.50. Kansas City salespeople are paid a 1% commission based on gross sales dollars.
Kansas City's sales manager oversees the placement of local advertising contracts, which totaled $65,000 for the year. Local property taxes amounted to $25,500.
The sales manager's $76,000 salary is set by Kansas City's store manager. In contrast, the store manager's $145,000 salary is determined by Midtown's vice president.
Kansas City incurred $12,300 of other noncontrollable costs.
Nontraceable (common) corporate overhead totaled $79,000.
Midtown's corporate headquarters is located in St. Louis, and the company uses responsibility accounting to evaluate performance.
Required:
Prepare segmented income statement for the Kansas City store, being sure to disclose the segment contribution margin, the segment controllable profit margin, and segment profit margin.
Variable costs:
Segment contribution margin
Traceable, controllable fixed costs:
Controllable fixed margin
Traceable uncontrollable fixed costs
Segment profit margin
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