Sunland Equipment sells equipment to sports enthusiasts. Doug Sunland, the compa

Question

Sunland Equipment sells equipment to sports enthusiasts. Doug Sunland, the company’s president, just received the following income statement reporting the results of the past year.

Doug is concerned that two of the company’s divisions are showing a loss, and he wonders if the company should stop selling baseball and basketball gear to concentrate solely on soccer gear.

Prepare a segment margin income statement. Fixed cost of goods sold and fixed operating expenses can be traced to each division

Baseball Soccer Basketball Total Sales revenue $1,320,000 $3,780,000 $2,484,000 $7,584,000 Variable cost of goods sold 891,000 2,457,000 2,001,600 5,349,600 Fixed cost of goods sold 120,200 196,200 172,800 489,200 Gross profit 308,800 1,126,800 309,600 1,745,200 Variable operating expenses 178,200 604,800 248,400 1,031,400 Fixed operating expenses 82,800 88,200 76,500 247,500 Common fixed costs 63,000 135,000 101,700 299,700 Operating income ($15,200 ) $298,800 ($117,000 ) $166,600 Prepare a segment margin income statement. Fixed cost of goods sold and fixed operating expenses can be traced to each division. (If the amount is negative then enter with a negative sign preceding the number, e.g. -5,125 or parenthesis, e.g. (5,125).) Baseball Socce Basketball Total

Explanation / Answer

Computation of Segment margin income statement

Particulars Baseball Soccer Basketball Total Sales Revenue $1,320,000 $3,780,000 $2,484,000 $7,584,000 Less:Variable Expenses Variable cost of goods sold 891,000 2,457,000 2,001,600 5,349,600 Variable operating expenses 178,200 604,800 248,400 1,031,400 Contribution Margin $250,800 $718,200 $234,000 $12,03,000 Less:Direct Fixed Expenses Fixed Cost of goods sold 120,200 196,200 172,800 489,200 Fixed Operating Expenses 82,800 88,200 76,500 247,500 Contribution to indirect expenses $47,800 $433,800 ($15,300) $4,66,300 Less:Common Fixed Expenses $299,700 Net Income $166,600

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.