Question

Buckeye Department Stores, Inc. operates a chain of department stores in Ohio. The company’s organization chart appears below. Operating data for 20x1 follow.

BUCKEYE DEPARTMENT STORES, INC.
Operating Data for 20x1
(in thousands)
	Columbus Division
	Olentangy Store			Scioto Store			Downtown Store				Cleveland Division (total for all stores)
Sales revenue	$	5,000		$	2,500		$	12,000			$	22,000
Variable expenses:
Cost of merchandise sold		3,000			2,100			6,000				13,000
Sales personnel—salaries		500			310			760				1,700
Sales commissions		60			50			90				220
Utilities		80			70			160				320
Other		70			35			130				270
Fixed expenses:
Depreciation—buildings		130			90			260				480
Depreciation—furnishings		90			50			150				310
Computing and billing		40			30			75				180
Warehouse		80			70			210				460
Insurance		40			25			90				220
Property taxes		35			20			80				190
Supervisory salaries		160			110			410				910
Security		30			30			80				230

The following fixed expenses are controllable at the divisional level: depreciation—furnishings, computing and billing, warehouse, insurance, and security. In addition to these expenses, each division annually incurs $60,000 of computing costs, which are not allocated to individual stores.

The following fixed expenses are controllable only at the company level: depreciation—building, property taxes, and supervisory salaries. In addition to these expenses, each division incurs costs for supervisory salaries of $110,000, which are not allocated to individual stores.

Buckeye Department Stores incurs common fixed expenses of $130,000, which are not allocated to the two divisions. Income-tax expense for 20x1 is $2,050,000.

Required:

1. Prepare a segmented income statement for Buckeye Department Stores, Inc. Please fill in the chart I provided below, thank you!

Prepare a segmented income statement for Buckeye Department Stores, Inc. (Enter your answers in thousands.)

Segments of Company Segments of Columbus Division Buckeye Department Stores, Inc. Cleveland Division Columbus Division Olentangy Store Scioto Store Downtown Store Not Allocated Sales revenue Variable operating expenses: Cost of merchandise sold Sales personnel—salaries Sales commissions Other Total variable expenses $0 $0 $0 $0 $0 $0 $0 Segment contribution margin $0 $0 $0 $0 $0 $0 $0 Fixed expenses controllable by segment manager: Computing and billing Depreciation—furnishings Insurance Security Total $0 $0 $0 $0 $0 $0 $0 Profit margin controllable by segment manager $0 $0 $0 $0 $0 $0 $0 Fixed expenses, traceable to segment, but controllable by others: Depreciation—buildings Property taxes Total $0 $0 $0 $0 $0 $0 $0 Profit margin traceable to segment $0 $0 $0 $0 $0 $0 $0 Common fixed expenses Income before taxes $0 Income tax expense Net income $0

Answer 1

1)		Segments of Company			Segments of Columbus Division
	Buckeye Department Stores, Inc.	Cleveland Division	Columbus Division	Olentangy Store	Scioto Store	Downtown Store	Not Allocated
Sales Revenue:	$      41,500	$      22,000	$      19,500	$        5,000	$       2,500	$      12,000	0
Variable operating expenses:
Cost of merchandise sold	$      24,100	$      13,000	$      11,100	$        3,000	$       2,100	$        6,000
Sales personnel—salaries	$        3,270	$        1,700	$        1,570	$           500	$          310	$           760
Sales commissions	$           420	$           220	$           200	$             60	$            50	$             90
Utilities	$           630	$           320	$           310	$             80	$            70	$           160
Other	$           505	$           270	$           235	$             70	$            35	$           130
Total variable expenses	$      28,925	$      15,510	$      13,415	$        3,710	$       2,565	$        7,140
Segment contribution margin	$      12,575	$        6,490	$        6,085	$        1,290	$          (65)	$        4,860
Fixed expenses controllable by segment manager:
Depreciation—furnishings	$           600	$           310	$           290	$             90	$            50	$           150
Computing and billing	$           385	$           240	$           145	$             40	$            30	$             75	60
Warehouse	$           820	$           460	$           360	$             80	$            70	$           210
Insurance	$           375	$           220	$           155	$             40	$            25	$             90
Security	$           370	$           230	$           140	$             30	$            30	$             80
Total	$        2,550	$        1,460	$        1,090	$           280	$          205	$           605	60
Profit margin controllable by segment manager	$      10,025	$        5,030	$        4,995	$        1,010	$        (270)	$        4,255	-60
Fixed expenses, traceable to segment, but controllable by others:
Depreciation—buildings	$           960	$           480	$           480	$           130	$            90	$           260
Property taxes	$           325	$           190	$           135	$             35	$            20	$             80
Supervisory salaries	$        1,700	$        1,020	$           680	$           160	$          110	$           410	110
Total	$        2,985	$        1,690	$        1,295	$           325	$          220	$           750	110
Profit margin traceable to segment	$        7,040	$        3,340	$        3,700	$           685	$        (490)	$        3,505	-170
Less: Common fixed expenses	$           130
Income before taxes	$        6,910
Less: Income tax expense	$        2,050
Net income	$        4,860