Show-Off, Inc. sells merchandise through three retail outlets—inLas Vegas, Reno, and Sacramento—and operates a general corporateheadquarters in Reno. A review of the company’s income statementindicates a record year in terms of sales and profits. Management,though, desires additional insights about the individual stores andhas asked that Judson Wyatt, a newly hired intern, prepare asegmented income statement. The following information has beenextracted from Show-Off’s accounting records:

• The sales volume, sales price, and purchase price datafollow:

	Las Vegas			Reno			Sacramento
Sales volume		37,900	units		41,900	units		46,360	units
Unit selling price	$	27.00		$	25.50		$	23.25
Unit purchase price		12.75			12.75			15.75

• The following expenses were incurred for sales commissions,local advertising, property taxes, management salaries, and othernoncontrollable (but traceable) costs:

	Las Vegas			Reno			Sacramento
Sales commissions		5	%		5	%		5	%
Local advertising	$	17,400		$	37,500		$	99,000
Local property taxes		7,200			3,450			11,700
Sales manager salary		—			—			61,500
Store manager salaries		51,000			67,500			75,000
Other noncontrollable costs		9,600			7,350			35,700

1. Local advertising decisions are made at the store managerlevel. The sales manager’s salary in Sacramento is determined bythe Sacramento store manager; in contrast, store manager salariesare set by Show-Off’s vice president.

• Nontraceable fixed corporate expenses total $333,450.
• The company uses a responsibility accounting system.

Required:

1. Assume the role of Judson Wyatt and prepare a segmented incomestatement for Show-Off.
2. Identify the probable causes for the poor performance of theweakest store.
3. Which of the following should be reviewed in evaluating theperformance of the store manager?

Assume the role of Judson Wyatt and prepare a segmented incomestatement for Show-Off. (Round your answers to the nearest wholedollar.)

	Show-Off, Inc. Las Vegas Reno Sacramento Variable operating expenses: Total Segment contribution margin Fixed expenses controllable by segmentmanager: Total Profit margin controllable by segmentmanager Fixed expenses traceable to segment,but controllable by others: Total Segment profit margin

• Required 1

Identify the probable causes for the poor performance of theweakest store. (Select which of the following statements (is) aretrue by selecting an "X".)

	The markup on cost of the other twooutlets at Las Vegas and Reno is much higher. The store manager's salary is thehighest for Sacramento’s in terms of units sold. The return on the outlay of advertisingand sales manager's salary is inadequate. The other noncontrollablecost of Sacramento’s outlet is very high compared to that of theoutlets at Las Vegas and Reno.

Which of the following should be reviewed in evaluating theperformance of the store manager?

	should be reviewed inevaluating the performance of the store manager.