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 64,400 units at $19.00 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 $57,000 for the year. Local property taxes amounted to $17,500.
• The sales manager's $68,000 salary is set by Kansas City’s store manager. In contrast, the store manager's $137,000 salary is determined by Midtown’s vice president.
• Kansas City incurred $8,300 of other noncontrollable costs.
• Nontraceable (common) corporate overhead totaled $71,000.

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.

Answer 1