Unit #6 - Question 10-25 (A)

Trent Weaver was reviewing the latest income statement for Taryn Enterprises. For the second year in a row, the Collectibles division was showing a negative segment margin, and Trent thought it was time to close the division to increase the companys operating income. The income statement that he examined follows.

When Trent broke the news, Taylor Tatum, manager of the Collectibles division, was upset. Taylor thought that Trent could be making a snap judgment, and suggested that he look at the divisions detailed operating results. The Collectibles division is composed of two groups, Sports Memorabilia and Coins and Stamps. Sports Memorabilia accounts for 60% of the divisions sales and contribution margin; Coins and Stamps accounts for the other 40%. Sports Memorabilias traceable fixed costs are $811,100; Coins and Stamps, $246,200.

A - Prepare a segment margin income statement for the Collectibles division that shows the segment margin of each group. (If the amount is negative then enter with a negative sign preceding the number e.g. -5,125 or parenthesis. e.g. (5,125) and Round answers to 0 decimal places, e.g. 5,125.)

Please use these categories for the items listed 1 =

Promotions Collectibles Total Division Division $5,311,400 $2,862,400 $8,173,800 Revenue Less variable expenses 3,665,800 1,648,300 5,314,100 Contribution margin 1,645,600 1,214,100 2,859,700 Less traceable fixed expenses 945,100 1,275,200 2,220,300 Segment margin $700,500 $(61,100) 639,400 Common fixed costs 568,000 $71,400 Net operating income