Buckeye Department Stores, Inc., operates a chain of department stores in Ohio.

Question

Buckeye Department Stores, Inc., operates a chain of department stores in Ohio. The company's organization chart appears below. Operating data for 2005 follow. Buckeye Department Store Columbus Division Cleveland Division Gluntary Downtown Individual store BUCKEYE DEPARTMENT STORES, INC. Operating Data for 2015 (in thousands) Columbus Division Olentangy Store $4,000 2,000 600 Scioto Store $2.600 Downtown Store $10,000 5,000 750 90 140 170 310 Sales (enue Variable expenses Cost of merchandise solid Sales personnel-salaries Sales commissions Utilities Other Fred expenses Depreciation-buildings Depreciation—furnishings Computing and billing VWarehouse Insurance Property taxes Supervisory salaries Security g w R8 er484898 Cleveland Division (total for al stores) $21,000 11,000 1.500 230 280 470 190 450 200 240 320 200 230 900 The following fixed expenses are controllable at the divisional levelt depreciation—furnishings, computing and biling, warehouse, insurance, and security. In addition to these expenses, each division annualy incurs $40,000 of computing costs, which are not allocated to individual stores. The following fixed expenses are controllable only at the company level: depreciation-building. property toes, and supervisory salaries. In acidition to these expenses, each division incurs costs for supervisory salaries of $100,000, which are not allocated to individual stores. Buckeye Department stores incurs common fixed expenses of $150,000, which are not allocated to the wo divisions. Income-tax expense for 2005 is $1,950,000. Required: 1. Prepare a segmented income statement for Buckeye Department Stores, Inc. (Enter your answers in thousands.) Segments of Company Segments of Columbus Division Buckeye Department Cleveland Columbus Clentangy Stores, Inc. Division Division Scioto Store Store Allocated Store Scioto Store Downtown Not Variable operating expenses Cost of merchandise sold Sales personnel-salaries Sales commissions Uites Other Total variable expenses Segment contribution margin Fred expenses controlabie by segme Depredation-umishings Computing and bing Warehouse Prott margin controllable by segment manag Ficed expenses, traceable to segment, but controllable by others Depreciation-buildings Property taxes Supervisory salaries Profe megin traceable to segment income tax expense

Explanation / Answer

Segments of Company Segments of Columbus Division Buckeye Department Stores, Inc. Cleveland Division Columbus Division Olentangy Store Scioto Store Downtown Store Not Allocated Sales revenue 37600 21000 16600 4000 2600 10000 0 Variable operating expenses: Cost of merchandise sold 20200 11000 9200 2000 2200 5000 Sales personnel-salaries 3150 1500 1650 600 300 750 Sales commissions 410 230 180 40 50 90 Utilities 620 310 310 70 70 170 Other 515 280 235 60 35 140 Total variable expenses 24895 13320 11575 2770 2655 6150 0 Segment contribution margin 12705 7680 5025 1230 -55 3850 0 Fixed expenses controllable by segment manager: Depreciation-furnishings 610 320 290 70 60 160 Computing and billing 425 230 195 40 20 95 40 Warehouse 780 450 330 60 70 200 Insurance 385 230 155 40 25 90 Security 360 240 120 20 20 80 Total 2560 1470 1090 230 195 625 40 Profit margin controllable by segment manager 10145 6210 3935 1000 -250 3225 -40 Fixed expenses, traceable to segment, but controllable by others: Depreciation-buildings 920 470 450 110 90 250 Property taxes 335 200 135 35 20 80 Supervisory salaries 1790 1030 760 140 120 400 100 Total 3045 1700 1345 285 230 730 100 Profit margin traceable to segment 7100 4510 2590 715 -480 2495 -140 Common fixed expenses 150 Net operating income 6950 Income tax expense 1950 Net income 5000

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