Solution-Prepare a segment margin income statement for shoe

Prepare a segment margin income statement for shoe

Reference no: EM131802700

Shoe Shock Innovations manufactures 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	Total Shoe Shock
Revenue	$494,700	$2,505,000	$2,999,700
Less variable expenses	318,000	2,018,000	2,336,000
Contribution margin	176,700	487,000	663,700
Less traceable fixed expenses	124,700	349,700	474,400
Segment margin	$52,000	$137,300	189,300
Common fixed costs	173,200
Net operating income	$16,100

Chris Kelly is Shoe Shock's sales manager. Although this statement provides useful information, 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 footwear stores and 45% of all fixed costs to drug stores.

(a) Prepare a segment margin income statement for Shoe Shock's two distribution channels. (If the amount is negative then enter with a negative sign preceding the number e.g. -5,125 or parenthesis. e.g. (5,125).)

Reference no: EM131802700

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Prepare a segment margin income statement for shoe

Reference no: EM131802700

Reference no: EM131802700

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