Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 1 of 2 View Policies Show Attempt History Current Attempt in Progress 0.98/4 E Shoe Shock Innovations manufactures athletic shoe inserts that cushion
Question 1 of 2 View Policies Show Attempt History Current Attempt in Progress 0.98/4 E 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. Sole Inserts Division Heel Inserts Division Total Shoe Shock Sales revenue $493,000 $2,533,000 $3,026,000 Less variable expenses 301,000 2,023,000 2,324,000 Contribution margin 192,000 510,000 702,000 Less traceable fixed expenses 122,300 350,000 472,300 Segment margin $69,700 $160,000 229,700 Common fixed costs 174,100 Net operating income $55,600 Patricia Johnson is Shoe Shock's sales manager. Although this statement provides useful information, Patricia wants to know how well the company's two distribution channels, specialty footwear stores and drug stores, are performing. Marketing data indicates that 35% of sole inserts and 60% of heel inserts are sold through specialty footwear stores. A recent analysis of corporate fixed costs revealed that 40% of all fixed costs are traceable to specialty footwear stores and 5.5% of all fixed costs to drug stores. (a) Your answer is partially correct. Prepare a segment margin income statement for Shoe Shock's two distribution channels. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45).) Revenue Sole Inserts Heel Inserts Specialty Footwear Stores 172550 1013200 Total revenue Less vertable expens Heel Inserts 105350 Sole Insert 809200 Total variable expenses Contribution margin Traceable Fixed expens Segmented margin Common fixed expenses Operating Income 1185750 [ [ [ 914550 271200
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started