Question

Spiess Corporation has two major business segments--Apparel and Accessories. Data concerning those segments for December appear below: Sales revenues, Apparel $ 775,000 Variable expenses, Apparel $ 314,000 Traceable fixed expenses, Apparel $ 201,000 Sales revenues, Accessories $ 799,000 Variable expenses, Accessories $ 425,000 Traceable fixed expenses, Accessories $ 128,000 Common fixed expenses totaled $401,000 and were allocated as follows: $172,000 to the Apparel business segment and $229,000 to the Accessories business segment. Required: Prepare a segmented income statement in the contribution format for the company.

Answer 1

Spiess Corporation

The segmented income statement in the contribution format for December:

Apparel Accessories Total

Sales revenues, $ 775,000 $ 799,000 $1,574,000

Variable expenses, 314,000 425,000 739,000

Contribution margin $461,000 $374,000 $835,000

Traceable fixed expenses, 201,000 128,000 329,000

Common fixed expenses 172,000 229,000 401,000

Total expenses $373,000 $357,000 $730,000

Net income $88,000 $17,000 $105,000

Step-by-step explanation:

a) Data and Calculations:

Apparel Accessories

Sales revenues, $ 775,000 $ 799,000

Variable expenses, 314,000 425,000

Traceable fixed expenses, 201,000 128,000

Common fixed expenses 172,000 229,000

b)Spiess' segmented income statement presents the revenues and costs according to the business segments to enable the managers understand how their specific segments are performing vis-a-vis others in Spiess Corporation. It serves as a managerial tool for business insights.