Part A: (answer in the Excel Solution Workbook file on the Question 2 tab)

In order to resolve product line issues, reformat the above Segmented Income Statement.

a.Rent, utilities, depreciation, and property taxes are Common Fixed Costs and have been allocated equally among the 4 product lines. If any one of the product lines was eliminated, these costs will remain.

b. Details of salaries and commissions follow:

1. 10% sales commissions were paid on all sales except for the sales of the Repair & Service department.

1. Besides sales commissions, the four sales clerks are paid a fixed amount of $1,400 each per month.They sell all three product lines (skis, bikes and accessories), so their salaries are considered common costs.

1. The two managers are paid a fixed amount of $40,000 each per year. Both are responsible for the company as a whole.

1. During the year, the two Repair & Service technicians combined were paid a total fixed salary of $59,999 for the whole year and are traced entirely to the Repair & Service Department.Thus, if the department was discontinued, the technicians would not be required.