Homework Help is Here – Start Your Trial Now!
Business
Accounting
Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement (in terms of the Brazilian currency, the real, R) for last month is given below: Sales Variable expenses Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation Total traceable fixed expenses Divisional segment margin Common fixed expenses Operating income -Total Company R 4,186,000 1,874,760 2,311,240 Sales Traceable fixed expenses: R 760,000 570,000 241,000 1,571,000 Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales 740,240 396,000 344,240 Divisions Cloth 2,300,000 1,020,000 1,280,000 R 360,000 270,000 121,000 751,000 R 529,000 R Top management can't understand why the Leather Division has such a low segment margin when its sales are only 18% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division: Leather R 1,886,000 854,760 1,031,240 Garments R560,000 Leather Division Product Lines Handbags R 86,000 R 36,000 R 25,000 400,000 300,000 120,000 820,000 211,240 60% Shoes R750,000 R118,000 R 41,000 R 62,000 30% R576,000 R196,000 R 42,000 R 33,000 51%

Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement (in terms of the Brazilian currency, the real, R) for last month is given below: Sales Variable expenses Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation Total traceable fixed expenses Divisional segment margin Common fixed expenses Operating income -Total Company R 4,186,000 1,874,760 2,311,240 Sales Traceable fixed expenses: R 760,000 570,000 241,000 1,571,000 Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales 740,240 396,000 344,240 Divisions Cloth 2,300,000 1,020,000 1,280,000 R 360,000 270,000 121,000 751,000 R 529,000 R Top management can't understand why the Leather Division has such a low segment margin when its sales are only 18% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division: Leather R 1,886,000 854,760 1,031,240 Garments R560,000 Leather Division Product Lines Handbags R 86,000 R 36,000 R 25,000 400,000 300,000 120,000 820,000 211,240 60% Shoes R750,000 R118,000 R 41,000 R 62,000 30% R576,000 R196,000 R 42,000 R 33,000 51%

Financial And Managerial Accounting
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter21: Variable Costing For Management analysis
Section: Chapter Questions
Problem 15E
See similar textbooks
icon
Related questions
Question

Manji 

Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement (in terms of the Brazilian currency, the real, R) for last month is given below: Sales Variable expenses Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation Total traceable fixed expenses Divisional segment margin Common fixed expenses Operating income Total Company R 4,186,000 1,874,760 2,311,240 Sales Traceable fixed expenses: 760,000 570,000 241,000 1,571,000 740,240 396,000 R 344, 240 Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales R Top management can't understand why the Leather Division has such a low segment margin when its sales are only 18% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division: Leather Division Divisions Cloth R 2,300,000 1,020,000 1,280,000 0 R 360,000 270,000 121,000 751,000 R 529,000 R Garments R560,000 R 86,000 R 36,000 R 25,000 60% Leather R 1,886,000 854,760 1,031,240 HRAC Leather Division Product Lines. Handbags Garments 0 400,000 300,000 120,000 820,000 211,240 Analysis shows that R181,000 of the Leather Division's selling and administrative expenses are common to the product lines. Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines. R Shoes R750,000 R118,000 R 41,000 R 62,000 30% Product Line Shoes 0 R576,000 R R196,000 R 42,000 R 33,000 51% Handbags 0
Transcribed Image Text:Severo S.A. of Sao Paulo, Brazil, is organized into two divisions. The company's contribution format segmented income statement (in terms of the Brazilian currency, the real, R) for last month is given below: Sales Variable expenses Contribution margin Traceable fixed expenses: Advertising Selling and administrative Depreciation Total traceable fixed expenses Divisional segment margin Common fixed expenses Operating income Total Company R 4,186,000 1,874,760 2,311,240 Sales Traceable fixed expenses: 760,000 570,000 241,000 1,571,000 740,240 396,000 R 344, 240 Advertising Selling and administrative Depreciation Variable expenses as a percentage of sales R Top management can't understand why the Leather Division has such a low segment margin when its sales are only 18% less than sales in the Cloth Division. As one step in isolating the problem, management has directed that the Leather Division be further segmented into product lines. The following information is available on the product lines in the Leather Division: Leather Division Divisions Cloth R 2,300,000 1,020,000 1,280,000 0 R 360,000 270,000 121,000 751,000 R 529,000 R Garments R560,000 R 86,000 R 36,000 R 25,000 60% Leather R 1,886,000 854,760 1,031,240 HRAC Leather Division Product Lines. Handbags Garments 0 400,000 300,000 120,000 820,000 211,240 Analysis shows that R181,000 of the Leather Division's selling and administrative expenses are common to the product lines. Required: 1. Prepare a contribution format segmented income statement for the Leather Division, with segments defined as product lines. R Shoes R750,000 R118,000 R 41,000 R 62,000 30% Product Line Shoes 0 R576,000 R R196,000 R 42,000 R 33,000 51% Handbags 0
Expert Solution
steps

Step by step

Solved in 3 steps with 3 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Segment Reporting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
SEE MORE TEXTBOOKS