Question

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 center 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	$	4,400,000
Fixed costs
Partly traceable and controllable		295,000
Partly traceable but noncontrollable		265,000
Nontraceable costs		115,000
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 store		52	%
New York—Men’s Apparel		45
New York—Women’s Apparel		60
Variable operating costs (percent of sales)
London store		36	%
New York—Men’s Apparel		22
New York—Women’s Apparel		32
Fixed controllable costs—partly traceable (percent of total)
London store		40	%
New York total		40
Men’s Apparel		45
Women’s Apparel		40
Could not be traced to Men’s or Women’s Apparel		15
Could not be traced to London or New York		20
Fixed noncontrollable costs—partly traceable (percent of total)
London store		50	%
New York total		40
Men’s Apparel		35
Women’s Apparel		15
Could not be traced to Men’s or Women’s Apparel		50
Could not be traced to London or New York		10

Required:

1. Using this information, prepare a contribution income statement for Fashionisto.

See instruction bellow for order

	Combined company	Not allocated	London Store	New York Store	Not allocated	Men's wear	Woman's wear
Variable Cost
Total Variable cost	0		0	0		0	0
	0		0	0		0	0
	0	0	0	0	0	0	0
	0

Answer 1

	Combined Company	Not Allocated	London Store	New York Store	Not Allocated	Men's Wear	Woman's Wear
Sales revenue	4400000	0	1760000	2640000	0	1056000	1584000
Variable cost
Cost of goods sold	2340800	0	915200	1425600	0	475200	950400
Operating cost	1372800	0	633600	739200	0	232320	506880
Total variable cost	3713600	0	1548800	2164800	0	707520	1457280
Contribution margin	686400	0	211200	475200	0	348480	126720
Less: Controllable fixed costs	295000	59000	118000	118000	17700	53100	47200
Controllable margin	391400		93200	357200		295380	79520
Less: Noncontrollable fixed costs	265000	26500	132500	106000	53000	37100	15900
Contribution by profit center	126400	-85500	-39300	251200	-70700	258280	63620
Less: Nontraceable costs	115000
Net income	11400