Midtown Retail operates a retail store in Kansas City, MO., and St. Louis, MO. T

Question

Midtown Retail operates a retail store in Kansas City, MO., and St. Louis, MO. The following information relates to the Kansas City facility: The store sold 61,000 units at $38.00 each, after having purchased the units from various suppliers for $30.50. Kansas City salespeople are paid a 1% commission based on gross sales dollars Kansas City's sales manager oversees the placement of local advertising contracts, which totaled $74,000 for the year. Local property taxes amounted to $34,500 The sales manager's $85,000 salary is set by Kansas City's store manager. In contrast, the store manager's $154,000 salary is determined by Midtown's vice president. Kansas City incurred $16,800 of other noncontrollable costs Nontraceable (common) corporate overhead totaled $88,000. Midtown's corporate headquarters is located in St. Louis, and the company uses responsibility accounting to evaluate performance. Required: Prepare a segmented income statement for the Kansas City store, being sure to disclose the segment contribution margin, the segment controllable profit margin, and segment profit margin. Variable costs Segment contribution margin Traceable, controllable fixed costs: Controllable profit margin Traceable, uncontrollable fixed costs: Segment profit margin

Explanation / Answer

Sales revenue 2318000 =61000*38 Less variable costs: Cost of goods sold 1860500 =61000*30.5 Sales commissions 23180 1883680 Segment contribution margin 434320 Less traceable, controllable fixed costs: Local advertising 74000 Sales manager’s salary 85000 159000 Controllable profit margin 275320 Less traceable, uncontrollable fixed costs: Local property taxes 34500 Store manager’s salary 154000 Other 16800 205300 Segment profit margin 70020

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---