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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 63,000 units at $27.00 each, after having purchased the units from various suppliers for $20.50. Kansas City salespeople are paid a 4% commission based on gross sales dollars.
- Kansas Citys sales manager oversees the placement of local advertising contracts, which totaled $64,000 for the year. Local property taxes amounted to $24,500.
- The sales manager's $75,000 salary is set by Kansas Citys store manager. In contrast, the store manager's $144,000 salary is determined by Midtowns vice president.
- Kansas City incurred $11,800 of other noncontrollable costs.
- Nontraceable (common) corporate overhead totaled $78,000.
Midtowns corporate headquarters is located in St. Louis, and the company uses responsibility accounting to evaluate performance. Required: Prepare a 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 profit margin Traceable, uncontrollable fixed costs: Segment profit margin
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