Midtown Retail operates a retail store in Kansas City, MO., and St. Louis, MO. The following information relates to the Kansas City facility:
· The store sold 65,000 units at $18.00 each, after having purchased the units from various suppliers for $12.50. Kansas City salespeople are paid a 5% commission based on gross sales dollars.
· Kansas City's sales manager oversees the placement of local advertising contracts, which totaled $54,000 for the year. Local property taxes amounted to $14,500.
· The sales manager's $65,000 salary is set by Kansas City's store manager. In contrast, the store manager's $134,000 salary is determined by Midtown's vice president.
· Kansas City incurred $6,800 of other noncontrollable costs.
· Nontraceable (common) corporate overhead totaled $68,000.
Midtown's corporate headquarters is located in St. Louis, and the company uses responsibility accounting to evaluate performance.
Required:
Prepare a segmented income statement for the Kansas City store, being sure to disclose the segment contribution margin, the segment controllable profit margin, and segment profit margin.

Question

Midtown Retail operates a retail store in Kansas City, MO., and St. Louis, MO. The following information relates to the Kansas City facility:
· The store sold 65,000 units at $18.00 each, after having purchased the units from various suppliers for $12.50. Kansas City salespeople are paid a 5% commission based on gross sales dollars.
· Kansas City's sales manager oversees the placement of local advertising contracts, which totaled $54,000 for the year. Local property taxes amounted to $14,500.
· The sales manager's $65,000 salary is set by Kansas City's store manager. In contrast, the store manager's $134,000 salary is determined by Midtown's vice president.
· Kansas City incurred $6,800 of other noncontrollable costs.
· Nontraceable (common) corporate overhead totaled $68,000.
Midtown's corporate headquarters is located in St. Louis, and the company uses responsibility accounting to evaluate performance.
Required: 
Prepare a segmented income statement for the Kansas City store, being sure to disclose the segment contribution margin, the segment controllable profit margin, and segment profit margin.

Quizplus · Accepted Answer

The Answer of Midtown Retail operates a retail store in Kansas City, MO., and St. Louis, MO. The following information relates to the Kansas City facility:
· The store sold 65,000 units at $18.00 each, after having purchased the units from various suppliers for $12.50. Kansas City salespeople are paid a 5% commission based on gross sales dollars.
· Kansas City's sales manager oversees the placement of local advertising contracts, which totaled $54,000 for the year. Local property taxes amounted to $14,500.
· The sales manager's $65,000 salary is set by Kansas City's store manager. In contrast, the store manager's $134,000 salary is determined by Midtown's vice president.
· Kansas City incurred $6,800 of other noncontrollable costs.
· Nontraceable (common) corporate overhead totaled $68,000.
Midtown's corporate headquarters is located in St. Louis, and the company uses responsibility accounting to evaluate performance.
Required: 
Prepare a segmented income statement for the Kansas City store, being sure to disclose the segment contribution margin, the segment controllable profit margin, and segment profit margin.

Midtown Retail Operates a Retail Store in Kansas City, MO