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Severo S . A of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement in terms of the Brazilian
Severo SA of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement in terms of the Brazilian currency, the real, R for last month is given below
Sales
variable expenses
Contribution margin
Total Company
R
Cloth
Leather
Traceable fixed expenses
Advertising
Selling and administrative
Depreciation
Total traceable fixed expenses Divisimal segment margin
$
Common Fixed expenses
eferences
Operating income
Top management can't understand why the Leather Divisaon has such a low segment margin when its sales are only less than sales in the Cloth Division: As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division
Leather Division Product Lines
Sarments Shors
Sales
Traceable fixed Advertising
Selling and administrative
Depreciation
Variable expenses as a percentage of sales
Sex
Analysis shows that R of the Leather Division's selling and administrative expenses are common to the product lines
Required
Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines
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