Profit Centers and Segmented Income Statements

In a small owner-manager-operated business, (A. decentralization B. centralization) may be desirable. This is because the owner-manager's close supervision ensures that the business will be operated in the way the owner-manager wishes.

The center's name indicates the type of function. For example, a profit center is a segment of the business for which a manager has the responsibility and authority for making decisions that affect (A. Only revenues B. Only expenses C. Revenues and costs) and, thus, profits.

The profit center income statement should include (A. All revenues and expenses B. Only revenues and expenses that are not controlled C. Only revenues and expenses that are controlled) by the manager. Controllable revenues are revenues earned by the profit center. Controllable expenses are costs that can be influenced (controlled) by the decisions of profit center managers.

Please answer the questions in bold also thanks so much!

APPLY THE CONCEPTS: Construction of a segmented income statement Kalis has decided to expand its business into cookware, and plans to manufacture standard, deluxe, and economy cookware in one factory. Common fixed overhead for the factory is estimated to be $51,600, and common selling and administrative expenses are estimated to be $8,600. Sales commissions (a variable cost) of 3% of sales are paid on all product lines. The following estimates are available for 2012: Standard Deluxe Economy Sales $215,000 $387,000 $258,000 77,400 Variable cost of goods sold 107,500 54,800 20,210 66,177 43,215 Direct fixed overhead Direct fixed selling and administrative expenses 10,105 44,118 20,743 Using this information, construct a segmented income statement that displays the income statement information for each segment of the business and for the business as a whole Enter all amounts as positive numbers. If required, round amounts to the nearest cent. Kalis Company Segmented Income Statement For the Year 2012 Standard Deluxe Tota Economy Sales 387,000 258,000 860,000 215,000 Variable cost of goods sold 339,700 107,500 154,800 Variable selling expense Contribution margin Less direct fixed expenses: Direct fixed overhead 20,210 66,177 43,215 129,602 Direct selling and administrative 20,743 10,105 44,118 74,966 6 Segment margin Less common fixed expenses: Common fixed overhead Common selling and administrative Operating income