The IT Corporation produces and markets two types of electronic calculators: Model 11 and Model...
Question:
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 11 | Model 12 | |
|---|---|---|
| Sales in units | 5,000 | 3,000 |
| 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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View this answer| Segments | ||||||
| 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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Segment Margin & Decision-Making in Accounting
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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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