10-26 Segment margin income statement (LO 2) Shoe Shock Innovations manu- factures 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 Sales revenue Less variable expenses Contribution margin Less traceable fixed expenses Segment margin Common fixed costs Net operating income $500,000 300,000 200,000 120,000 $ 80,000 $2,500,000 2,000,000 500,000 350,000 $ 150,000 Total Shoe Shock $3,000,000 2,300,000 700,000 470,000 230,000 175,000 $ 55,000 Chris Kelly is Shoe Shock's sales manager. Although this statement provides useful infor- mation, Chris wants to know how well the company's 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 foot- wear stores and 45% of all fixed costs to drug stores. Required Want margin income statement for Shoe Shock's two distribution channels. a. Prepare a segment margin income statement for Shoe b. Based on your analysis, what recommendations would you make to the com