Problem: The Stanley Company produces and markets two product lines: Racquets and Gloves. The following data were gathered on activities during the third quarter:
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Racquets
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Gloves
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Sales in units
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1,000
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5,000
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Sales price per unit
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$100
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$40
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Variable production costs per unit
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$20
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$8
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Traceable fixed production costs
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$20,000
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$37,000
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Variable selling expenses per unit
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$11
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$2
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Traceable fixed selling expenses
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$10,000
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$23,000
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Allocated portion of corporate expenses
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$6,000
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$120,000
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Required:
a. Prepare a segmented income statement for last quarter, showing both "Amount" and "Percent" columns for the division as a whole and for each product line.
b. Discuss the differences between traceable costs and common costs.