a segmented income statement for the software division with the segments defined as 646832

AC203: Week 6 Segmented Income Statement Project Part 3: Computing Solutions has two divisions. The company’s contribution format income statement, segmented by divisions for 2011 is shown below. Computing Solutions Company Income Statement for 2011 Division Total Company Hardware Software Sales $1,500,000 $900,000 $600,000 Variable expenses 700,000 400,000 300,000 Contribution margin 800,000 500,000 300,000 Traceable fixed expenses: Advertising 300,000 180,000 120,000 Depreciation 140,000 92,000 48,000 Administration 220,000 118,000 102,000 Total 660,000 390,000 270,000 Divisional segment margin 140,000 $110,000 $ 30,000 Common fixed expenses 100,000 Net operating income $ 40,000 Management does not understand why the Software division has such a low segment margin when its sales are only one third less than the Hardware division. Management directed that the Software division be further segmented into product lines. Page 1AC203: Week 6 Segmented Income Statement Following is information on the product lines in the software division: Software Division Product Lines Business Gaming Software Software Sales $200,000 300,000 Traceable fixed expenses: Advertising 30,000 42,000 Depreciation 10,000 24,000 Administration 14,000 21,000 Variable expenses as a percentage of sales 65% 40% Common administrative expenses $ 60,000 An analysis shows that $60,000 of the Software division’s administration expenses are common to the product lines. Page 2