APPLY THE CONCEPTS: Construction of a segmented income statement Ross has decide

Question

APPLY THE CONCEPTS: Construction of a segmented income statement

Ross has decided to expand its business into cookware, and plans to manufacture standard, deluxe, and economy cookware in one factory. Common fixed overhead for the factory is estimated to be $42,000, and common selling and administrative expenses are estimated to be $7,000. Sales commissions (a variable cost) of 3% of sales are paid on all product lines. The following estimates are available for 2012:

Using this information, construct a segmented income statement that displays the income statement information for each segment of the business and for the business as a whole.

Enter all amounts as positive numbers. If required, round amounts to the nearest cent.

Standard Deluxe Economy Sales $175,000 $315,000 $210,000 Variable cost of goods sold 87,500 126,000 63,000 Direct fixed overhead 16,450 53,865 35,175 Direct fixed selling and administrative expenses 8,225 35,910 16,884

Explanation / Answer

Ross Company Segmented Income Statement For the Year 2012 Standard Deluxe Economy Total Sales $175,000 $315,000 $210,000 $700,000 Variable Cost of Goods Sold $87,500 $126,000 $63,000 $276,500 Variable Selling expense (3% of Sales) $5,250 $9,450 $6,300 $21,000 Contribution Margin $82,250 $179,550 $140,700 $402,500 Less: Direct Fixed Expenses Direct Fixed Overhead $16,450 $53,865 $35,175 $105,490 Direct Selling and Administrative $8,225 $35,910 $16,884 $61,019 Segment Margin $57,575 $89,775 $88,641 $235,991 Less: Common Fixed Expenses Common Fixed Overhead $42,000 Common Selling and Administrative $7,000 Operating Income $186,991

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.