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(solution) Shoe Shock Innovations manufactures athletic shoe inserts that


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. Warning

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(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).)

Specialty Footwear Stores Drug Stores Total Shoe Shock
 Common fixed expensesTraceable fixed expensesContribution marginVariable expensesOperating incomeHeel insertsSegment marginRevenueSole insertsTotal revenueTotal variable expenses
    Common fixed expenses    Total revenue    Heel inserts    Variable expenses    Total variable expenses    Contribution margin    Operating income    Revenue    Traceable fixed expenses    Segment margin    Sole inserts     $ $ $
    Total variable expenses    Traceable fixed expenses    Segment margin    Revenue    Total revenue    Variable expenses    Common fixed expenses    Operating income    Contribution margin    Sole inserts    Heel inserts    
 RevenueCommon fixed expensesTotal revenueTraceable fixed expensesOperating incomeSole insertsHeel insertsSegment marginVariable expensesTotal variable expensesContribution margin $ $ $
 LessAdd:  contribution marginoperating incomerevenuecommon fixed expensestotal variable expensessegment margintraceable fixed expensessole insertsheel insertstotal revenuevariable expenses
    Variable expenses    Revenue    Common fixed expenses    Heel inserts    Contribution margin    Total revenue    Traceable fixed expenses    Sole inserts    Total variable expenses    Segment margin    Operating income    
    Common fixed expenses    Variable expenses    Operating income    Total variable expenses    Revenue    Segment margin    Sole inserts    Contribution margin    Heel inserts    Total revenue    Traceable fixed expenses    
 Common fixed expensesContribution marginOperating incomeTraceable fixed expensesSegmented marginRevenueSole insertsHeel insertsTotal revenueVariable expensesTotal variable expenses
 Contribution marginTraceable fixed expensesSegmented marginCommon fixed expensesSole insertsRevenueHeel insertsTotal variable expensesTotal revenueVariable expensesOperating income
 Heel insertsTotal variable expensesTotal revenueOperating incomeVariable expensesRevenueCommon fixed expensesContribution marginSole insertsTraceable fixed expensesSegmented margin
 Total variable expensesContribution marginSole insertsRevenueVariable expensesOperating incomeHeel insertsTotal revenueTraceable fixed expensesSegmented marginCommon fixed expenses $ $
 Contribution marginTotal variable expensesCommon fixed expensesTraceable fixed expensesSegmented marginOperating incomeRevenueSole insertsHeel insertsTotal revenueVariable expenses
 Total variable expensesOperating incomeCommon fixed expensesRevenueTotal revenueContribution marginSegmented marginTraceable fixed expensesSole insertsHeel insertsVariable expenses $
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Shoe Shock Innovations manufactures athletic shoe inserts that cushion the foot and reduce the impact of exercise on the

 

Sole Inserts and Heel Inserts. A segmented income statement from last month...

 


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