Final answer:
The two main keys to building a segmented income statement are calculating the contribution margin for each segment and accurately allocating fixed costs to these segments.
Step-by-step explanation:
The two main keys to building a segmented income statement are understanding the concept of contribution margin and properly allocating fixed costs. First, calculation of the contribution margin, which is sales revenue minus variable expenses, helps in understanding the profitability of individual segments. This is essential because it indicates how much revenue from each segment is contributing to covering fixed costs and generating profit.
Second, the allocation of fixed costs must be done with precision. It requires an understanding of which costs are direct and can be attributed to specific segments, and which costs are common and must be spread across all segments. Demonstrated competence in these areas will result in a segmented income statement that provides clear insight into the financial performance of each business segment.