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Problem 10-26 (Part Level Submission) Shoe Shock Innovations manufactures athletic shoe inserts that cushion the foot and reduce the impact of exercise on the joints.
Problem 10-26 (Part Level Submission) Shoe Shock Innovations manufactures athletic shoe inserts that cushion the foot and reduce the impact of exercise on the joints. The company has two divisions, Sole Inserts and Heel Inserts. A segmented income statement from last month follows. Revenue Less variable expenses Contribution margin Less traceable fixed expenses Segment margin Common fixed costs Net operating income Sole Inserts Division $493,700 303,000 190,700 123,300 S67,400 Heel Inserts Division $2,540,000 2,009,000 531,000 349,700 $181,300 Total Shoe Shock $3,033,700 2,312,000 721,700 473,000 248, 700 171,900 $76,800 Chris Kelly is Shoe Shock's sales manager. Although this statement provides useful information, Chris wants to know how well the company's two distribution channels, specialty footwear stores and drug stores, are performing, Marketing data indicates that 20% of sole inserts and 75% of heel inserts are sold through specialty footwear stores. A recent analysis of corporate fixed costs revealed that 50% of all fixed costs are traceable to specialty footwear stores and 45% of all fixed costs to drug stores
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