Severo SA of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement on terms of the Brazilian currency, the real R) for last month is given below: Total Company 3,850,000 1,070,000 1,980,000 Divisions Cioth #2,200,000 1,050,000 1,150,000 Leather R 1,650,000 320,000 830,000 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 692,000 $26,000 247.000 1,465.000 515,000 399,000 R 116.000 390,000 300,000 124,000 814, 000 336,000 302.000 226,000 123,000 651.000 179,000 R R Top management can't understand why the Leather Division has such a low segment margin when its sales are only 25% 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 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: Handbal Markets Domestic Forel 10300,000 # 50,000 Sales Traceabile fixed expenses Advertising Variable expenses as a percentage of sales R 49,000 45% 73,000 BOX 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 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. Handbags Sales Market Domestic R Foreign R R Sales Vanable expenses 0 0 0 Traceable fixed expenses OR OR 0 Common foxed expenses Total common fixed expenses 0 0 3. Refer to the statement prepared in (1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A marketing study indicates that such a campaign would increase sales of the Garments product line by R209,000 or sales of the shoes product line by R154,000. The campaign would cost R39.000 a. Compute the increased operating income for these product lines for the expected increased sales Garments Shoes Increased operating income Severo SA of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement on terms of the Brazilian currency, the real R) for last month is given below: Total Company 3,850,000 1,070,000 1,980,000 Divisions Cioth #2,200,000 1,050,000 1,150,000 Leather R 1,650,000 320,000 830,000 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 692,000 $26,000 247.000 1,465.000 515,000 399,000 R 116.000 390,000 300,000 124,000 814, 000 336,000 302.000 226,000 123,000 651.000 179,000 R R Top management can't understand why the Leather Division has such a low segment margin when its sales are only 25% 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 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: Handbal Markets Domestic Forel 10300,000 # 50,000 Sales Traceabile fixed expenses Advertising Variable expenses as a percentage of sales R 49,000 45% 73,000 BOX 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 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. Handbags Sales Market Domestic R Foreign R R Sales Vanable expenses 0 0 0 Traceable fixed expenses OR OR 0 Common foxed expenses Total common fixed expenses 0 0 3. Refer to the statement prepared in (1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A marketing study indicates that such a campaign would increase sales of the Garments product line by R209,000 or sales of the shoes product line by R154,000. The campaign would cost R39.000 a. Compute the increased operating income for these product lines for the expected increased sales Garments Shoes Increased operating income
