Question

Spiess Corporation has two major business segments--Apparel and Accessories. Data concerning those segments for December appear below: Sales revenues, Apparel $ 775,000 Variable expenses, Apparel $ 314,000 Traceable fixed expenses, Apparel $ 201,000 Sales revenues, Accessories $ 799,000 Variable expenses, Accessories $ 425,000 Traceable fixed expenses, Accessories $ 128,000 Common fixed expenses totaled $401,000 and were allocated as follows: $172,000 to the Apparel business segment and $229,000 to the Accessories business segment. Required: Prepare a segmented income statement in the contribution format for the company.

Answer 1

Answer:

Spiess Corporation

The segmented income statement in the contribution format for December:

                                                  Apparel         Accessories   Total

Sales revenues,                     $ 775,000         $ 799,000   $1,574,000

Variable expenses,                   314,000             425,000       739,000

Contribution margin               $461,000           $374,000    $835,000

Traceable fixed expenses,       201,000             128,000       329,000

Common fixed expenses         172,000            229,000        401,000

Total expenses                      $373,000          $357,000     $730,000

Net income                              $88,000             $17,000      $105,000

Explanation:

a) Data and Calculations:

                                                  Apparel         Accessories

Sales revenues,                     $ 775,000         $ 799,000

Variable expenses,                   314,000             425,000

Traceable fixed expenses,       201,000             128,000

Common fixed expenses         172,000            229,000

b)Spiess' segmented income statement presents the revenues and costs according to the business segments to enable the managers understand how their specific segments are performing vis-a-vis others in Spiess Corporation.  It serves as a managerial tool for business insights.