Magellan & Columbus, Ltd., manufactures boats and personal watercraft. The compa

Question

Magellan & Columbus, Ltd., manufactures boats and personal watercraft. The company operates three separate divisions: yachts, sailboats, and jet skis. The company's latest income statement is presented by product line as follows Yachts Sailboats Jet Skis Total Sales revenue Variable cost of goods sold30,000,000 Fixed cost of goods sold Gross profit Variable operating expenses 8,000,000 Fixed operating expenses Allocated corporate costs Operating income $60,000,000 $22,000,000 $6,000,000 $88,000,000 45,500,000 9,000,000 5,000,000 700,000 14,700,000 21,000,000 5,000,000 1,800,000 27,800,000 10,350,000 5,300,000 6,000,000 $6,000,000$500,000 $(350,000) $ 6,150,000 12,000,000 3,500,000 1,500,000 4,000,000 1,000,000 850,000 300,000 3,000,000 2,000,000 1,000,000 Prepare a segment margin income statement showing each of the three divisions. Fixed cost of goods sold and fixed operating expenses can be traced to each product line (If the amount is negative then enter with a negative sign preceding the number e.g.-5,125 or parenthesis. e.g. (5,125). Yachts Sailboats Jet Skis Total

Explanation / Answer

SEGMENT-WISE INCOME STATEMENT OF ROCKY MOUNTAIN REGION Yacht Sailboats Jetskies Total AMOUNT $ AMOUNT $ AMOUNT $ AMOUNT $ Sales Revenue 60,000,000 22,000,000 6,000,000 88,000,000 Less: Variable Cost Variable Cost of Goods sold 30,000,000 12,000,000 3,500,000 45,500,000 Variable Operating expense 8,000,000 1,500,000 850,000 10,350,000 Total variable cost 38,000,000 13,500,000 4,350,000 55,850,000 Contribution Margin 22,000,000 8,500,000 1,650,000 32,150,000 Less: Fixed cost Fixed cost of Goods sold 9,000,000 5,000,000 700,000 14,700,000 Fixed Operating expense 4,000,000 1,000,000 300,000 5,300,000 SEGMENT MARGIN 9,000,000 2,500,000 650,000 12,150,000 Less: Corporate Allocatedexpense 6,000,000 Net Operating Income 6,150,000

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