Pratt Corporation has two major business segments-Apparel and Accessories. Data

Question

Pratt Corporation has two major business segments-Apparel and Accessories. Data concerning those segments for October appear below:

Common fixed expenses totaled $321,000 and were allocated as follows: $128,000 to the Apparel business segment and $193,000 to the Accessories business segment.

Required:

Prepare a segmented income statement in the contribution format for the compant

Sales revenues, Apparel $ 756,000 Variable expenses, Apparel $ 338,000 Traceable fixed expenses, Apparel $ 201,000 Sales revenues, Accessories $ 771,000 Variable expenses, Accessories $ 478,000 Traceable fixed expenses, Accessories $ 116,000

Explanation / Answer

Segmented income statement in the contribution format for the Pratt Corporation

Particulars Apparel Accessories Total Company Amount Amount Amount Sales $ 756,000 $     771,000 $       1,527,000 Less:Variable Expenses $ 338,000 $     478,000 $           816,000 Contribution margin $ 418,000 $     293,000 $           711,000 Less:Treaceble fixed expenses $ 201,000 $     116,000 $           317,000 Segment margin $ 217,000 $     177,000 $           394,000 Less:common fixed expenses $ 128,000 $     193,000 $           321,000 Net operating income / (Loss) $     89,000 $     (16,000) $             73,000

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