QUESTION 5

1. Segmented statements, prepared in a responsibility accounting reporting format, can be useful in performance evaluation and in operational decision-making. An outline of a segmented income statement prepared in responsibility accounting format and segmented by product line is presented below:

	Total Company	Product Line A	Product Line B
Revenue from sales	$XXX	$XXX	$XXX
Variable production costs	XXX	XXX	XXX
Margin I	$XXX	$XXX	$XXX
Variable selling and administrative costs	XXX	XXX	XXX
Margin II	$XXX	$XXX	$XXX
Traceable controllable fixed costs	XXX	XXX	XXX
Margin III	$XXX	$XXX	$XXX
Traceable committed (infrastructure) fixed costs	XXX	XXX	XXX
Margin IV	$XXX	$XXX	$XXX
Common fixed costs	XXX
Margin V	$XXX

In the above segmented income statement, a product line manager, such as the manager of product-line A, would be able to exercise control over all of the revenue and/or cost components which appear

		Margin I.
		Margin II.
		Margin III.
		Margin IV.