Prepare a segment margin income statement

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Reference no: EM133065523

Question - Sunland Equipment sells equipment to sports enthusiasts. Doug Sunland, the company's president, just received the following income statement reporting the results of the past year.

 

Baseball

Soccer

Basketball

Total

Sales revenue

$1,200,000

$3,450,000

$2,275,000

$6,925,000

Variable cost of goods sold

814,000

2,242,500

1,825,600

4,882,100

Fixed cost of goods sold

110,300

179,700

158,500

448,500

Gross profit

275,700

1,027,800

290,900

1,594,400

Variable operating expenses

162,800

552,000

227,500

942,300

Fixed operating expenses

76,200

80,500

69,900

226,600

Common fixed costs

57,500

124,000

92,900

274,400

Operating income

($20,800)

$271,300

($99,400)

$151,100

Doug is concerned that two of the company's divisions are showing a loss, and he wonders if the company should stop selling baseball and basketball gear to concentrate solely on soccer gear.

Required - Prepare a segment margin income statement. Fixed cost of goods sold and fixed operating expenses can be traced to each division.

Reference no: EM133065523

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