Kraft Bowlen owns two sports franchises—the Bladers (a hockey team) and the Ballers (a basketball team). The following information was provided for the coming year. Bladers Ballers Sales $80,000,000 $180,000,000 Variable cost of goods sold 10,000,000 30,000,000 Direct fixed overhead 20,000,000 100,000,000 A sales commission of 5% of sales revenue is paid for each of the two sports franchises. Direct fixed selling and administrative expense was estimated to be $4,000,000 for the Bladers franchise and $10,000,000 for the Ballers franchise. Common fixed overhead associated with owning the franchises was estimated to be $18,000,000; common selling and administrative expense was estimated to be $8,000,000. Required: Prepare a segmented income statement for Kraft Bowlen for the coming year, using variable costing. Note: Enter all amounts as positive numbers except operating loss, if applicable. Kraft Bowlen Segmented Income Statement For the Coming Year Bladers Ballers Total Cash $ $ $ Less variable expenses: Common selling and administrative Variable selling expense Contribution margin $ $ $ Less direct fixed expenses: Wages payable Wages payable Segment margin $ $ $ Less common fixed expenses: Wages payable Advertising Expense Operating income $

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

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Kraft Bowlen owns two sports franchises—the Bladers (a hockey team) and the Ballers (a basketball team). The following information was provided for the coming year.

	Bladers	Ballers
Sales	$80,000,000	$180,000,000
Variable cost of goods sold	10,000,000	30,000,000
Direct fixed overhead	20,000,000	100,000,000

A sales commission of 5% of sales revenue is paid for each of the two sports franchises. Direct fixed selling and administrative expense was estimated to be $4,000,000 for the Bladers franchise and $10,000,000 for the Ballers franchise.

Common fixed overhead associated with owning the franchises was estimated to be $18,000,000; common selling and administrative expense was estimated to be $8,000,000.

Required:

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

Note: Enter all amounts as positive numbers except operating loss, if applicable.

Kraft Bowlen
Segmented Income Statement
For the Coming Year
	Bladers	Ballers	Total
Cash	$	$	$
Less variable expenses:
Common selling and administrative
Variable selling expense
Contribution margin	$	$	$
Less direct fixed expenses:
Wages payable
Wages payable
Segment margin	$	$	$
Less common fixed expenses:
Wages payable
Advertising Expense
Operating income			$

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