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Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement (in terms of the Brazilian currency, the real, R) for last month is given below: Sales Variable expenses Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation Total traceable fixed expenses Divisional segment margin Common fixed expenses Operating income Sales Traceable fixed expenses: Total Company R 3,675,000 1,745,500 1,929,500 Traceable fixed expenses: R Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales Total traceable fixed expenses 634,000 449,000 233,000 1,316,000 Common fixed expenses: Top management can't understand why the Leather Division has such a low segment margin when its sales are only 25% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division: 613,500 392,000 221,500 R Leather Division 0 Divisions Cloth Leather R 2,100,000 R 1,575,000 980,000 765,500 1,120,000 809,500 R 320,000 230,000 117,000 667,000 R 453,000 R 0 OR Analysis shows that R108,000 of the Leather Division's selling and administrative expenses are common to the product lines. Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines. Garments R540,000 Leather Division Product Lines Handbags R275,000 R 82,000 R 32,000 R 21,000 60% Garments ▾ 0 314,000 219,000 116,000 649,000 160,500 R 0 OR Shoes R760,000 R114,000 R 37,000 R 58,000 40% Product Line Shoes 0 R R118,000 R 42,000 R 37,000 50% 0 OR Handbags 0 0 0

Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement (in terms of the Brazilian currency, the real, R) for last month is given below: Sales Variable expenses Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation Total traceable fixed expenses Divisional segment margin Common fixed expenses Operating income Sales Traceable fixed expenses: Total Company R 3,675,000 1,745,500 1,929,500 Traceable fixed expenses: R Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales Total traceable fixed expenses 634,000 449,000 233,000 1,316,000 Common fixed expenses: Top management can't understand why the Leather Division has such a low segment margin when its sales are only 25% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division: 613,500 392,000 221,500 R Leather Division 0 Divisions Cloth Leather R 2,100,000 R 1,575,000 980,000 765,500 1,120,000 809,500 R 320,000 230,000 117,000 667,000 R 453,000 R 0 OR Analysis shows that R108,000 of the Leather Division's selling and administrative expenses are common to the product lines. Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines. Garments R540,000 Leather Division Product Lines Handbags R275,000 R 82,000 R 32,000 R 21,000 60% Garments ▾ 0 314,000 219,000 116,000 649,000 160,500 R 0 OR Shoes R760,000 R114,000 R 37,000 R 58,000 40% Product Line Shoes 0 R R118,000 R 42,000 R 37,000 50% 0 OR Handbags 0 0 0

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 6P: Arctic Software Inc. has two product lines. The income statement for the year ended December 31...
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Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement (in terms of the Brazilian currency, the real, R) for last month is given below: Sales Variable expenses Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation Total traceable fixed expenses Divisional segment margin Common fixed expenses Operating income Sales Traceable fixed expenses: Total Company R 3,675,000 1,745,500 1,929,500 Traceable fixed expenses: R Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales Total traceable fixed expenses 634,000 449,000 233,000 1,316,000 Common fixed expenses: Top management can't understand why the Leather Division has such a low segment margin when its sales are only 25% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division: 613,500 392,000 221,500 R Leather Division 0 Divisions Cloth Leather R 2,100,000 R 1,575,000 980,000 1,120,000 R 320,000 230,000 117,000 667,000 R 453,000 R 0 OR Analysis shows that R108,000 of the Leather Division's selling and administrative expenses are common to the product lines. Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines. Garments R540,000 Leather Division Product Lines Handbags R275,000 R 82,000 R 32,000 R 21,000 60% Garments 765,500 809,500 0 314,000 219,000 116,000 649,000 160,500 R 0 OR Shoes R760,000 R114,000 R 37,000 R 58,000 40% Product Line Shoes 0 R R118,000 R 42,000 R 37,000 50% 0 OR Handbags 0 0 0
Transcribed Image Text:Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement (in terms of the Brazilian currency, the real, R) for last month is given below: Sales Variable expenses Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation Total traceable fixed expenses Divisional segment margin Common fixed expenses Operating income Sales Traceable fixed expenses: Total Company R 3,675,000 1,745,500 1,929,500 Traceable fixed expenses: R Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales Total traceable fixed expenses 634,000 449,000 233,000 1,316,000 Common fixed expenses: Top management can't understand why the Leather Division has such a low segment margin when its sales are only 25% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division: 613,500 392,000 221,500 R Leather Division 0 Divisions Cloth Leather R 2,100,000 R 1,575,000 980,000 1,120,000 R 320,000 230,000 117,000 667,000 R 453,000 R 0 OR Analysis shows that R108,000 of the Leather Division's selling and administrative expenses are common to the product lines. Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines. Garments R540,000 Leather Division Product Lines Handbags R275,000 R 82,000 R 32,000 R 21,000 60% Garments 765,500 809,500 0 314,000 219,000 116,000 649,000 160,500 R 0 OR Shoes R760,000 R114,000 R 37,000 R 58,000 40% Product Line Shoes 0 R R118,000 R 42,000 R 37,000 50% 0 OR Handbags 0 0 0
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