The IT Corporation produces and markets two types of electronic calculators: Model 11 and Model...


The IT Corporation produces and markets two types of electronic calculators: Model 11 and Model 12. The following data were gathered on activities last month:

Model 11Model 12
Sales in units5,0003,000
Selling price per unit$50$100
Variable production costs per unit$10$26
Traceable fixed production costs$100,000$150,000
Variable selling expenses per unit$5$6
Traceable fixed selling expenses$5,000$7,500
Allocated division administrative expenses$50,000$60,000

Required: Prepare a segmented income statement in the contribution format for last month.

Segmented income statement:

A segment is any department or activity of a company. When a manager of the segment seeks a report of the costs, revenue or profit data of the group, the manager will report a segmented income statement. The contribution format separates fixed from variable costs and enables the calculation of a contribution margin. Traceable fixed costs are separated from common fixed costs to enable the calculation of a segment margin and common costs should not be allocated to segments but calculated against the total of the segments.

Answer and Explanation: 1

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Total Percent Model 11 Percent Model 12 Percent
Sales revenue $550,000 100% $250,000 100% $300,000 100%
Variable expense $171,000 31...

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Learn more about this topic:

Segment Margin & Decision-Making in Accounting


Chapter 7 / Lesson 2

Segment margin accounts for costs associated with a segment of a business in order to understand the value of specific departments or sections of the organization. Examine segment margin alongside variable costs, fixed costs, and contribution margin, noting how each informs managerial decisions.

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