In: Accounting
Show-Off, Inc. sells merchandise through three retail outlets—in Las Vegas, Reno, and Sacramento—and operates a general corporate headquarters in Reno. A review of the company’s income statement indicates a record year in terms of sales and profits. Management, though, desires additional insights about the individual stores and has asked that Judson Wyatt, a newly hired intern, prepare a segmented income statement. The following information has been extracted from Show-Off’s accounting records:
Las Vegas | Reno | Sacramento | |||||||
Sales volume | 39,000 | units | 43,000 | units | 46,800 | units | |||
Unit selling price | $ | 38.00 | $ | 36.50 | $ | 34.25 | |||
Unit purchase price | 18.25 | 18.25 | 24.00 | ||||||
Las Vegas | Reno | Sacramento | |||||||
Sales commissions | 8 | % | 8 | % | 8 | % | |||
Local advertising | $ | 18,500 | $ | 43,000 | $ | 132,000 | |||
Local property taxes | 7,750 | 4,000 | 15,000 | ||||||
Sales manager salary | — | — | 78,000 | ||||||
Store manager salaries | 56,500 | 78,500 | 97,000 | ||||||
Other noncontrollable costs | 10,700 | 7,900 | 46,700 | ||||||
Required:
Assume the role of Judson Wyatt and prepare a segmented income statement for Show-Off. (Round your answers to the nearest whole dollar.)
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Show-Off, Inc. | Las Vegas | Reno | Sacramento | |
Sales revenue | $ 4,654,400.00 | $ 1,482,000.00 | $ 1,569,500.00 | $ 1,602,900.00 |
Variable operating expenses: | ||||
Sales commissions | $ 372,352.00 | $ 118,560.00 | $ 125,560.00 | $ 128,232.00 |
Cost of goods sold | $ 2,619,700.00 | $ 711,750.00 | $ 784,750.00 | $ 1,123,200.00 |
Total | $ 2,992,052.00 | $ 830,310.00 | $ 910,310.00 | $ 1,251,432.00 |
Segment contribution margin | $ 1,662,348.00 | $ 651,690.00 | $ 659,190.00 | $ 351,468.00 |
Fixed expenses controllable by segment manager: | ||||
Local advertising | $ 193,500.00 | $ 18,500.00 | $ 43,000.00 | $ 132,000.00 |
Sales manager salary | $ 78,000.00 | $ - | $ - | $ 78,000.00 |
Total | $ 271,500.00 | $ 18,500.00 | $ 43,000.00 | $ 210,000.00 |
Profit margin controllable by segment manager | $ 1,390,848.00 | $ 633,190.00 | $ 616,190.00 | $ 141,468.00 |
Fixed expenses traceable to segment, but controllable by others: | ||||
Local property taxes | $ 26,750.00 | $ 7,750.00 | $ 4,000.00 | $ 15,000.00 |
Other non-controllable costs | $ 65,300.00 | $ 10,700.00 | $ 7,900.00 | $ 46,700.00 |
Store manager salaries | $ 232,000.00 | $ 56,500.00 | $ 78,500.00 | $ 97,000.00 |
Total | $ 324,050.00 | $ 74,950.00 | $ 90,400.00 | $ 158,700.00 |
Segment profit margin | $ 1,066,798.00 | $ 558,240.00 | $ 525,790.00 | $ (17,232.00) |
Common fixed expenses | $ 388,450.00 | |||
Operating income | $ 678,348.00 |