Please help with this problem and provide a step-by-step calculation Shoe Shock Innovations manufactures athletic shoe inserts that cushion the foot and reduce the impact of exercise on the joints. The company has two divisions, Sole Inserts and Heel Inserts. A segmented income statement from last month follows.

Sole Inserts Heel Inserts Total Shoe

Division Division Shock

Revenue $496,000 $2,505,000 $3,001,000

Less variable expenses 304,000 2,020,000 2,324,000

Contribution margin 192,000 485,000 677,000

Less traceable fixed expenses 124,800 349,800 474,600

Segment margin $67,200 $135,200 202,400

Common fixed costs 174,900

Net operating income $27,500

Chris Kelly is Shoe Shocks sales manager. Although this statement provides useful information, Chris wants to know how well the companys two distribution channels, specialty footwear stores and drug stores are performing. Marketing data indicates that 20% of sole inserts and 75% of heel inserts are sold through specialty footwear stores. A recent analysis of corporate fixed costs revealed that 50% of all fixed costs are traceable to specialty footwear stores and 45% of all fixed costs to drug stores.

Prepare a segment margin income statement for Shoe Shocks two distribution channels.

Segment margin income statement needs the following answers:

Specialty Footwear Stores Drug Stores Total Shoe Shock

Revenue

Sole inserts

Heel inserts

Total revenue

Less variable expenses

Sole inserts

Heel inserts

Total variable expenses

Contribution margin

Traceable fixed expenses

Segmented margin

Common fixed expenses

Operating income