70.2K

Verified Solution

Link Copied!

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 $496,000 Heel Inserts Division Total Shoe Shock $2.518,000 $3,014,000 316,000 2,037,000 Sales revenue Less variable expenses Contribution margin Less traceable fixed expenses 2,353,000 180,000 481,000 661,000 122,600 348,700 471,300 Segment margin $57,400 $132.300 189.700 Common fixed cos 172,200 Net operating income $17.500 Nancy Jackson is Shoe Shock's sales manager. Although this statement provides useful information, Nancy wants to know how well the company's two distribution channels, specialty footwear stores and drug stores, are performing. Marketing data indicates that 35% of sole inserts and 60% of heel inserts are sold through specialty footwear stores. A recent analysis of corporate fued costs revealed that 40% of all fixed costs are traceable to specialty footwear stores and 55% of all fixed costs to drug stores. Specialty Footwear Stores Revenue Sole Inserts 173600 Heel inserts 15108001 Total revenue 1684400 Less : variable expenses Sole Inserts 110600 Heel inserts 1222200 Total variable expenses 1332800 Contribution margin V 351600 Traceable foxed expenses 257400 Segmented margin 94200 Common foxed expenses Operating income (45) Drug Stores Total Shoe Shock 322400 i $ 496000 1007200 2518000 1329600 $ 3014000 i 205400 i 316000 i 814800 i 2037000 1020200 2353000 309400 661000 353925 611325 i 44525 49675 172200 122525

Answer & Explanation Solved by verified expert

See Answer