Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 19

Contribution Income Statement; Spreadsheet Application High Fashion 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, High Fashion'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:


Required
1. Using this information, prepare a contribution income statement for High Fashion, 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. Using Excel is highly recommended for this problem; Excel can improve accuracy and allows for easy assessment of changed assumptions.
2. What are the global issues that are an important part of the profit center evaluation for High Fashion Inc.