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: Divisions Total Company Cloth Leather Sales R 4, 080 ,000 R 2, 400, 900 R 1, 680, 606 Variable expenses 2, 033,608 1, 070,090 963, 606 Contribution margin 2, 047 , 600 1, 330, 090 717, 606 Traceable fixed expenses: Advertising 650, 060 410, 006 240, 606 Selling and administrative 548,060 326, 600 228, 090 Depreciation 261 , 600 126, 060 135, 909 Total traceable fixed expenses 1, 459, 600 856, 060 603, 906 Divisional segment margin 588, 900 R 474, 080 8 114,090 Common fixed expenses 401, 090 Operating income R 187,006Top 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: Leather Division Product Lines Garments Shoes Handbags Sales R510,060 R750, 060 R420, 060 Traceable fixed expenses: Advertising R 61, 060 R 84, 600 R 95, 006 Selling and administrative R 41, 006 R 46, 009 Depreciation R 30 , 606 R 67, 906 R 35, 060 Variable expenses as a percentage of sales 70%% 50% 15 5% Analysis shows that R71,000 of the Leather Division's selling and administrative expenses are common to the product lines.2. Management is surprised by the handbag product line's poor showing and would like to have the product line segmented by market. The following information is available about the markets in which the handbag line is sold: Handbag Markets Domestic Foreign Sales R306, 000 R120 , 060 Traceable fixed expenses: Advertising R 51,000 R 44,090 Variable expenses as a percentage of sales 45% 80%All of the handbag product line's selling and administrative expenses and depreciation are common to the markets in which the product is sold. Prepare a contribution format segmented income statement for the handbag product line with segments defined as markets. Sales Market Handbags Domestic Foreign R R RI Traceable fixed expenses: R R Common fixed expenses. Total common fixed expenses R