Henrietta, Ltd. produces fine clothing for women. There are two primary divisions within the company: professional wear and formal wear. The following income statements were prepared for the divisions:
|
Professional |
Formal |
| Sales |
$1,280,000 |
|
$1,770,000 |
|
| Variable expenses |
975,000 |
|
1,370,000 |
|
| Contribution margin |
$305,000 |
|
$400,000 |
|
| Fixed expenses |
130,000 |
|
215,000 |
|
| Income |
$175,000 |
|
$185,000 |
|
The income statements were prepared by an inexperienced staff accountant. Common fixed expenses of $ 48,000 were allocated to the two divisions as follows: 30 percent to professional wear and 70 percent to formal wear.
Required:
Prepare new segmented income statements for Henrietta, Ltd. after removing the common fixed expenses.