Question 3: (15 points) Problem 12-23 Finely Segmented Income Statements [LO1] Companhia Bradesco, S., of Brazil, an industrial supply store chain,...

Question 3: (15 points)Problem 12-23 Finely Segmented Income Statements [LO1]Companhia Bradesco, S.A., of Brazil, an industrial supply store chain, has two divisions. The company's contribution format income statement segmented by divisions for last year is given below (the currency in Brazil is the real, denoted here by R): Divisions Total Company Plastics GlassSales R 3,501,000 R 1,998,000 R 1,503,000Variable expenses 1,726,700 959,040 767,660Contribution margin 1,774,300 1,038,960 735,340Traceable fixed expenses:Advertising 610,800 299,000 311,800Depreciation 229,000 115,000 114,000Administration 425,100 209,000 216,100Total 1,264,900 623,000 641,900Division segment margin 509,400 R 415,960 R 93,440Common fixed expenses 386,000Net operating income R 123,400--------------------------------------------------------------------------------Top management doesn't understand why the Glass Division has such a low segment margin when its sales are only 24.77% less than sales in the Plastics Division. Accordingly, management has directed that the Glass Division be further segmented into product lines. The following information is available on the product lines in the Glass Division: Glass Division Product Lines Flat Glass Auto Glass Specialty GlassSales R 499,000 R 698,000 R 306,000Traceable fixed expenses:Advertising R 79,700 R 111,900 R 120,200Depreciation R 25,500 R 55,700 R 32,800Administration R 30,200 R 35,100 R 42,500Variable expenses as a percentage of sales 66 % 40 % 52 %--------------------------------------------------------------------------------Analysis shows that R108,300 of the Glass Division's administration expenses are common to the product lines.Requirement 1:Prepare a contribution format segmented income statement for the Glass Division with segments defined as product lines. (Negative amounts other than the expenses should be indicated by a minus sign. Omit the "R" sign in your response.) Product Line GlassDivision Flat Glass Auto Glass Specialty GlassSales R R R RVariable expensesContribution marginTraceable fixed expenses:AdvertisingDepreciationAdministrationTotalProduct line segment margin R R RCommon fixed expensesAdministrationDivisional segment margin R--------------------------------------------------------------------------------Requirement 2:Management is surprised by Specialty Glass's poor showing and would like to have the product line segmented by market. The following information is available about the two markets in which Specialty Glass is sold: Specialty Glass Markets Domestic ForeignSales R 204,000 R 102,000Traceable fixed expenses:Advertising R 40,400 R 79,800Variable expenses as a percentage of sales 43 % 70 %--------------------------------------------------------------------------------All of Specialty Glass's depreciation and administration expenses are common to the markets in which the product is sold. Calculate the following for the Specialty Glass product line with segments defined as markets. (Negative amounts should be indicated by a minus sign. Omit the "R" sign in your response.)Domestic market segment margin RForeign market segment margin RProduct line segment margin RRequirement 3:(a) Refer to the statement prepared in (Requirement 1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A market study indicates that such a campaign would increase sales of Flat Glass by R205,000 or sales of Auto Glass by R143,000. The campaign would cost R28,000. Calculate the increased net operating income. (Omit the "R" sign in your response.) Flat Glass Auto GlassNet operating income R R-------------------------------------------------------------------------------- (b) Which product line should be chosen?Flat Glass Auto Glass Product line segment margin RRequirement 3:(a) Refer to the statement prepared in (Requirement 1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A market study indicates that such a campaign would increase sales of Flat Glass by R205,000 or sales of Auto Glass by R143,000. The campaign would cost R28,000. Calculate the increased net operating income. (Omit the "R" sign in your response.) Flat Glass Auto GlassNet operating income R R-------------------------------------------------------------------------------- (b) Which product line should be chosen?Flat Glass Auto Glass