Total Company R 3,850,000 1,870,000 1,980,000 Divisions Cloth Leather R 2,200,000 R 1,650,000 1,050,000 820,000 1,150,000 830,000 Sales Variable expenses Contribution margin Traceable fixed expenses Advertising Selling and administrative Depreciation Total traceable Fixed expenses Divisional seguent margin Common fixed expenses Operating income 692,000 526,000 247 000 1,465,000 515,000 199,000 R 116,000 390,000 300,000 124,000 314,000 336,000 R 302,000 226,000 123,00 651,000 179,000 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 avallable on the product lines in the Leather Division: Leather Division Product Lines Garments Shoes Handbags R500,000 R800,000 R350.000 Sales Traceable fixed expenses Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales R 59,000 R 39,000 R 28,000 R121,000 R 44,000 65,000 40% R122,800 R 60,000 R 30,000 65% Sex Analysis shows that R83,000 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 R300,000 R 50,000 Traceable fixed expenses Advertising R 49,000 R 73,000 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 R 0 0 0 Traceable fixed expenses OR OR 0 Common fixed expenses Total common fixed expenses 0 R 0