Segment Reporting and Analysis

The Essential Baking Company bakes artisan loaves, baguettes, and rolls and sells them in cities throughout the Northwest. Assume the following March income statement was prepared for the stores located in Seattle and Portland:

THE ESSENTIAL BAKING COMPANY

Territory Income Statements

For Month of March

$($in thousands$)$ Seattle Portland Total

Sales $$8,400$ $$6,800$ $$15,200$

Cost of goods sold $4,7963,8948,690$

Gross profit $3,6042,9066,510$

Selling and administrative expenses $2,7552,1554,910$

Net income $$849$ $$751$ $$1,600$

Sales and selected variable expense data are as follows:

Products

Loaves Baguettes Rolls

Fixed baking expenses $$565$ $$450$ $$410$

Variable baking expenses as a percentage of sales $50\%50\%40\%$

Variable selling expenses as a percentage of sales $10\%20\%20\%$

City of Seattle, sales $($in thousands$)$ $$3,800$ $$2,650$ $$1,950$

City of Portland, sales $($in thousands$)$ $$3,250$ $$2,150$ $$1,400$

The fixed selling expenses were $$1,440$ for March, of which $$860$ was a direct expense of the Seattle market and $$580$ was a direct expense of the Portland market. Fixed administrative expenses were $$1,135,$ which management has decided not to allocate when using the contribution approach.

Required

a$.$ Prepare a segment income statement showing the margin for each territory $($city$)$ for March. Include a column combining the two territories.

Note: Do not use a negative sign with your answers.

The Essential Baking Company

Territory and Company Income Statements

For the Month of March

$($in thousands$)$ Seattle Portland

Sales Answer

$3800$

Answer

$2650$

Answer

$6450$

Variable expenses:

Baking Answer

$-2198$

Answer

$-1538$

Answer

$-3736$

Selling Answer

$1602$

Answer

$1112$

Answer

$2714$

Contribution margin Answer

$-2080$

Answer

$-1360$

Answer

$0$

Direct fixed selling expenses Answer

$0$

Answer

$0$

Answer

$0$

Territory margin Answer

$0$

Answer

$0$

Answer

$0$

Common fixed expenses:

Baking Answer

$0$

Administrative Answer

$0$

Net income Answer

$0$

b$.$ Prepare segment income statements showing the product margin for each product. Include a column for the combined products.

Note: Do not use a negative sign with your answers.

The Essential Baking company

Product and Company Income Statements

For the Month of March

$($in thousands$)$ Loaves Baguettes Rolls Company

Sales:

Seattle Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Portland Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Total Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Variable expenses:$*$

Baking Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Selling Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Total Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Contribution margin Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Fixed baking expenses Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Product margin Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Common fixed expenses:

Selling Answer

$0$

Administrative Answer

$0$

Total Answer

$0$

Net income Answer

$0$

c$.$ If the rolls line is dropped and fixed baking expenses do not change, what is the product margin for loaves and baguettes? What is the company$-$wide adjusted net income?

Note: Round your answers below to the nearest whole dollar.

$($in thousands$)$

Product margin for loaves: Answer

$0$

Product margin for baguettes: Answer

$0$

Net income: Answer

$0$