Explanation Segmented Income Statement using Variable Costing: Variable costing is used in the preparation of a segmented income statement. In this income statement, the variable expenses are recorded separately from the fixed expenses which are further divided into direct fixed expenses and common expenses. The following table represents the segmented income statement of Company K: Company K Segmented Income Statement For the Coming Year Bladders ($) Ballers ($) Total ($) Sales 80,000,000 180,000,000 260,000,000 Less variable expenses 1 : Variable cost of goods sold 10,000,000 30,000,000 40,000,000 Variable selling expense 4,000,000 9,000,000 13,000,000 Contribution margin 66,000,000 141,000,000 207,000,000 Less direct fixed expenses: Direct fixed overhead 20,000,000 100,000,000 120,000,000 Direct selling and administrative 4,000,000 10,000,000 14,000,000 Segment margin 42,000,000 31,000,000 73,000,000 Less common fixed expenses: Common fixed overhead 18,000,000 Common selling and administrative 8,000,000 Operating income 47,000,000 Table (1) Therefore, the amount of operating income is $47,000,000...

Cengagenowv2, 1 Term Printed Access Card For Mowen/hansen/heitger?s Managerial Accounting: The Cornerstone Of Business Decision-making, 7th

7th Edition

ISBN: 9781337115926

Author: MOWEN, Maryanne M.; Hansen, Don R.; Heitger, Dan L.

Publisher: Cengage Learning

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Chapter 8, Problem 28BEB

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Chapter 8 Solutions

Cengagenowv2, 1 Term Printed Access Card For Mowen/hansen/heitger?s Managerial Accounting: The Cornerstone Of Business Decision-making, 7th

Ch. 8 - What is the difference between tactical and...Ch. 8 - Prob. 2DQ Ch. 8 - What role do past costs play in relevant costing...Ch. 8 - Explain why depreciation on an existing asset is...Ch. 8 - Give an example of a future cost that is not...Ch. 8 - Can direct materials ever be irrelevant in a...Ch. 8 - Why would a firm ever offer a price on a product...Ch. 8 - What is a segment?Ch. 8 - Prob. 9DQ Ch. 8 - Discuss the importance of complementary effects in...

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Prepare a segmented income statement using variable costing for the coming year.

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Prepare a segmented income statement using variable costing for the coming year.

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