For the year ended December 31 — Grand Sporting Goods retailer equipment Last sales revenues totalled 000 Total expenses

Grand’s Sporting Goods is a retailer of sporting equipment. Last year, Grand’s Sporting Goods’ sales revenues totalled $6,000,000. Total expenses were $2,100,000. Of this amount, approximately $1,500,000 were variable, while the remainder were fixed. Since Grand’s Sporting Goods offers thousands of different products, its managers prefer to calculate the break-even point in terms of sales dollars rather than units.

Assume that Grand’s Sporting Goods gathers information on the sales of their products based on two departments: Winter Sports and Summer Sports. Winter Sports revenues are $4,000,000 of the total $6,000,000 and the department has an average contribution mar- gin of 70%, while Summer Sports brings in the remaining revenues and has a contribution margin of 85%. Of the fixed costs, $250,000 can be directly traced to Winter Sports and $300,000 can be traced to Summer Sports. Prepare a segmented contribution margin income statement for Grand’s Sporting Goods.

SOLUTION

Grand’s Sporting Goods

Segmented Contribution Margin Income Statement

For the year ended December 31

Winter Sports Summer Sports Total