statem S. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented inco 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 Dlvision be further segmented into product lines. The following information is available on the product lines in the Leather Division: Analysis shows that R67,000 of the Leather Division's selling and administrative expenses are cummun........ iduct Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments define 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 ic vich the handbag line is solit 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. 3. Refer to the statement prepared in (1) above. The sales manager wants to run a special promotional campaign of the product lines over the next month. A marketing study indicates that such a campaign would increase sales Garments product line by R220,000 or sales of the shoes product line by R165,000. The campaign would cost R35 a. Compute the increased operating income for these product lines for the expected increased sales. b. Based on the above results, which product line should be chosen? Garments Shoes statem S. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented inco 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 Dlvision be further segmented into product lines. The following information is available on the product lines in the Leather Division: Analysis shows that R67,000 of the Leather Division's selling and administrative expenses are cummun........ iduct Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments define 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 ic vich the handbag line is solit 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. 3. Refer to the statement prepared in (1) above. The sales manager wants to run a special promotional campaign of the product lines over the next month. A marketing study indicates that such a campaign would increase sales Garments product line by R220,000 or sales of the shoes product line by R165,000. The campaign would cost R35 a. Compute the increased operating income for these product lines for the expected increased sales. b. Based on the above results, which product line should be chosen? Garments Shoes
