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 currency, the real, R) for last month is given below. Sales Variable expenses Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation Total traceable fixed expenses) Divisional segment margin Common fixed expenses Operating income Total Company Divisions Cloth Leather R 3,825,000 1,889,750 R 2,250,000 R 1,575,000 1,010,000 879,750 1,935,250 1,240,000 695,250 592,000 350,000 242,000 482,000 260,000 222,000 239,000 120,000 119,000 1,313,000 730,000 583,000 622,250 395,000 R 510,000 R 112,250 R 227,250 Top management can't understand why the Leather Division has such a low segment margin when its sales are only 30% 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: Sales Traceable fixed expenses: Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales Leather Division Product Lines Garments R550,000 Shoes R700,000 Handbags R325,000 R 65,000 R 82,000 R 95,000 R. 35,000 R 24,000 65% R 40,000 R 38,000 R 61,000 50% R 34,000 53% Analysis shows that R109,000 of the Leather Division's selling and administrative expenses are common to the product lines. Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lifes Product Line Leather Division Garments Shoes Handbags