Question:1 Shoe Shock Innovations manufactures athletic shoe inserts that cushio

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Question:1 Shoe Shock Innovations manufactures athletic shoe inserts that cushion the foot and reduce the impact of exercise on the joints. The company has two divisions, Sole Inserts and Heel Inserts. A segmented income statement from last month follows Sole Inserts Division Heel Inserts Division Total Shoe Shock Sales revenue Less variable expenses Contribution margin Less traceable fixed expenses123,400 Segment margin Common fixed costs Net operating income $493,400 $2,538,000 $3,031,400 312,000 2,009,000 2,321,000 181,400 529,000 710,400 349,600 473,000 $179,400 237,400 171,800 65,600 $58,000 Chris Kelly is Shoe Shock's sales manager. Although this statement provides useful information, Chris wants to know how well the company's two distribution channels, specialty otwear stores and drug stores, are performing. Marketing data indicates that 20% of sole inserts and 75% of heel inserts are sold through specialty footwear stores. A recent analy of corporate fixed costs revealed that 50% of all fixed costs are traceable to specialty footwear stores and 45% of all fixed costs to drug stores. ! (a) Prepare a segment margin income statement for Shoe Shock's two distribution channels.(If the amount is negative then enter with a negative sign preceding the number e.g.-5,125 or parenthesis, e.g.(5,125) Specialty Footwear Stores Drug Stores Total Shoe Shock

Explanation / Answer

Speciality Footwear Stores Drug Stores Total Shoe Shock Revenue Sole Insert 98680 394720 493400 Heal Insert 1903500 634500 2538000 Total Revenue 2002180 1029220 3031400 Less Variable Expense Sole Insert 62400 249600 312000 Heal Insert 1506750 502250 2009000 Total Variable Expense 1569150 751850 2321000 Contrbution Margin 433030 277370 710400 Tracable Fixed Expense 322400 290160 612560 Segment Margin 110630 -12790 97840 Common Fixed Epense 32240 Operating Income 65600 Total Fixed Cost Traceable fixed expenses 473000 Common fixed costs 171800 Total Fixed Cost 644800 Less 50% specialty footwear stores 322400 Less 45% of all fixed costs to drug stores 290160 Common Fixed Expense 32240

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