Contribution Income Statement for Profit Centers Glamour, 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, Glamour's CFO, wants to use strategic performance measurement to bet- ter understand the company's financial results. She has decided to use the profit centers method to measure performance and has gathered the following information about the two stores and the two departments of the New York City store:
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Total net sales
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$2,250,000
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Fixed costs
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Partly traceable and controllable
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200,000
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Partly traceable but non-controllable
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160,000
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Non-traceable costs
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55,000
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Total net sales (percent)
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London Store
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40%
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New York-Men's Apparel
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30
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New York-Women's Apparel
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70
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Cost of goods sold-variable (percent of sales)
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London
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55%
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New York-Men's Apparel
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60
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New York-Women's Apparel
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40
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Variable operating costs (percent of sales)
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|
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London
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34%
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New York-Men's Apparel
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24
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New York-Women's Apparel
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30
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Fixed controllable costs-partly traceable (percent of total)
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London
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40%
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New York total
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40
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Men's Apparel
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45
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Women's Apparel
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40
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Could not be traced to Men's or Women's apparel
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15
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Could not be traced to New York or London
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20
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Fixed non-controllable costs-partly traceable (percent of total)
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London
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50%
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New York total
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40
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Men's Apparel
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30
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Women's Apparel
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10
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Could not be traced to Men's or Women's apparel
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60
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Could not be traced to London or New York
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10
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Required
1. Using this information and a spreadsheet system, prepare a contribution income statement for Glamour, showing contribution margin, controllable margin, and contribution by profit center (CPC) for both the London and New York stores and for both departments of the New York store.
2. What are the global issues that are an important part of the profit center evaluation for Glamour Inc.?