Pratt Corporation has two major business segments-Apparel and Accessories. Sales

Question

Pratt Corporation has two major business segments-Apparel and Accessories. Sales for the Apparel segment were $130,000 with a 48% contribution margin and sales for the Accessories segment were $540,000 with a 55% contribution margin. Fixed expenses totaled $153,000. $17,000 of fixed expenses were traceable to the Apparel segment and $92,000 were traceable to the Accessories segment. Required: Prepare a segmented income statement for the company using the contribution format. Omit percentages; show only dollar amounts. a) . b) Calculatebrementedowonlydollaramounts.ecompany b) Calculate break even sales $ for each segment and for the company.

Explanation / Answer

a)

b)

Total Company Apparel Accessories Amount Amount Amount Sales $               670,000 $                                                 130,000 $                                                      540,000 Variable Expenses   $               310,600 $130,000*(100%-48%) = $67,600 $540,000 * (100%-55%) = $243,000 Contribution margin $               359,400 $                                                    62,400 $                                                      297,000 Treaceble fixed expenses $               109,000 $                                                    17,000 $                                                        92,000 Segment margin $               250,400 $                                                    45,400 $                                                      205,000 common fixed expenses ($153,000-$109,000) $                 44,000 Net operating income / (Loss) $               206,400

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