Fashionisto, Inc., is an upscale clothing store in New York City and London. Each store has two main departments, Men's Apparel and Women's Apparel. Marie Phelps, Fashionisto's CFO, wants to use strategic performance measurement to better understand the company's financial results. She has decided to use the profit SBU method to measure performance and has gathered the following information about the two stores and the two departments of the New York City store:

Total net sales………………………………………………………………………….	$3,500,000
Fixed costs:……………………………………………………………………………
Partly traceable and controllable ………………………………………………..	250,000
Partly traceable but noncontrollable ……………………………………………………	220,000
Nontraceable costs ………………………………………………………………………	70,000
Total net sales (percent):………………………………………………………………….
London Store………………………………………………………………………..	40%
New York Store…………………………………………………………………….	60%
New York—Men’s Apparel ………………………………………………………..	40%
New York—Women’s Apparel ……………………………………………………..	60%
Cost of goods sold—variable (percent of sales):
London ……………………………………………………………………………..	52%
New York—Men’s Apparel …………………………………………………………..	45%
New York—Women’s Apparel……………………………………………………..	60%
Variable operating costs (percent of sales:
London ……………………………………………………………………………..	36%
New York—Men’s Apparel ………………………………………………………..	22%
New York—Women’s Apparel ……………………………………………………..	32%
Fixed controllable costs—partly traceable (percent of total):
London ……………………………………………………………………………..	40%
New York total ……………………………………………………………………..	40%
Men’s Apparel …………………………………………………………………..	45%
Women’s Apparel ……………………………………………………………….	40%
Could not be traced ……………………………………………………………..	15%
Could not be traced to New York or London…………………………………………	20%
Fixed noncontrollable costs—partly traceable (percent of total):
London ……………………………………………………………………………..	50%
New York total …………………………………………………………………….	40%
Men’s Apparel ………………………………………………………………….	35%
Women’s Apparel ……………………………………………………………….	15%
Could not be traced to either department………………………………………….	50%
Could not be traced to London or New York ………………………………………..	10%

Required

1. Using this information, prepare a contribution income statement for Fashionisto, showing contribution margin, controllable margin, and contribution by profit center (CPC) for both the London and New York stores and for both departments of the New York Store. Using Excel is highly recommended for this problem; Excel can improve accuracy and allows for easy assessment of changed assumptions.

2. What are the global issues that are an important part of the profit center evaluation for Fashionisto Inc.?