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	$491,300		$2,549,000		$3,040,300
Less variable expenses	311,000		2,011,000		2,322,000
Contribution margin	180,300		538,000		718,300
Less traceable fixed expenses	123,500		348,100		471,600
Segment margin	$56,800		$189,900		246,700
Common fixed costs					173,800
Net operating income					$72,900

Chris Kelly is Shoe Shocks sales manager. Although this statement provides useful information, Chris wants to know how well the companys two distribution channels, specialty footwear stores and drug stores, are performing. Marketing data indicates that 20% of sole inserts and 75% of heel inserts are sold through specialty footwear stores. A recent analysis of corporate fixed costs revealed that 50% of all fixed costs are traceable to specialty footwear stores and 45% of all fixed costs to drug stores.

(a)

Prepare a segment margin income statement for Shoe Shocks two distribution channels. (If the amount is negative then enter with a negative sign preceding the number, e.g. -5,125 or parenthesis, e.g. (5,125).)

	Specialty Footwear Stores		Drug Stores		Total Shoe Shock
Variable expensesHeel insertsTotal revenueRevenueTotal variable expensesOperating incomeSole insertsContribution marginTraceable fixed expensesSegment marginCommon fixed expenses
Segment margin Traceable fixed expenses Contribution margin Total revenue Variable expenses Heel inserts Common fixed expenses Total variable expenses Operating income Revenue Sole inserts	$		$		$
Operating income Total revenue Revenue Sole inserts Segment margin Traceable fixed expenses Variable expenses Heel inserts Common fixed expenses Total variable expenses Contribution margin
Segment marginHeel insertsTotal revenueVariable expensesTotal variable expensesOperating incomeContribution marginTraceable fixed expensesCommon fixed expensesRevenueSole inserts		$		$		$
AddLess : sole insertsheel insertstotal revenuevariable expensestotal variable expensesoperating incomesegment margintraceable fixed expensescontribution margincommon fixed expensesrevenue
Heel inserts Operating income Segment margin Variable expenses Revenue Sole inserts Total variable expenses Contribution margin Common fixed expenses Traceable fixed expenses Total revenue
Contribution margin Traceable fixed expenses Total revenue Sole inserts Variable expenses Operating income Common fixed expenses Heel inserts Revenue Total variable expenses Segment margin
Heel insertsOperating incomeSegmented marginVariable expensesRevenueCommon fixed expensesSole insertsTotal revenueTotal variable expensesContribution marginTraceable fixed expenses
Sole insertsHeel insertsTraceable fixed expensesRevenueCommon fixed expensesTotal revenueSegmented marginVariable expensesTotal variable expensesContribution marginOperating income
Contribution marginSole insertsCommon fixed expensesOperating incomeRevenueTraceable fixed expensesHeel insertsTotal revenueVariable expensesSegmented marginTotal variable expenses
Total variable expensesRevenueTraceable fixed expensesTotal revenueSegmented marginOperating incomeHeel insertsSole insertsVariable expensesContribution marginCommon fixed expenses		$		$
Traceable fixed expensesSegmented marginCommon fixed expensesTotal revenueOperating incomeRevenueContribution marginHeel insertsSole insertsVariable expensesTotal variable expenses
RevenueTotal variable expensesOperating incomeContribution marginSegmented marginTraceable fixed expensesCommon fixed expensesVariable expensesSole insertsHeel insertsTotal revenue						$

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