Question

The company has been experiencing losses for many months. In an effort to improve performance, management has requeste the monthly income statement be segmented by sales region. The company's first effort at preparing a segmented income stal for May is given below. Sales Regional expenses (traceable) Cost of goods sold Advertising Salaries Utilities Depreciation Shipping Total regional expenses Regional income (Loss) before corporate expenses Corporate expenses Advertising general) General d istrative expense Total corporate expenses Net operating income (less) The cost of goods sold and shipping expense are both variable. All other costs are filled Required: 3. Prepare a new contribution format segmented income statement for May. (Round percentage answers to 1 decimal place.) Total Company Amount West Amount Central Amount Amount Total variable expenses 0 000 000 00 Traceable fed expenses Totaltested expenses or 0 000 0 000 000 30 Common f ees Totalcommon foed expense Net operating income (oss) 0 0 0 0 0 0

Answer 1

	Total Company		West		Central		East
	Amount	%	Amount	%	Amount	%	Amount	%
Sale	$1,808,000	100%	$313,000	100.00%	$796,000	100.00%	$699,000	100.00%
Variable expense
Cost of goods sold	$638,000	35%	$90,000	28.75%	$238,000	29.90%	$310,000	44.35%
Shipping expense	$85,000	5%	$17,000	5.43%	$25,000	3.14%	$43,000	6.15%
Total variable expense	$723,000	40%	$107,000	34.19%	$263,000	33.04%	$353,000	50.50%
Contribution margin	$1,085,000	60%	$206,000	65.81%	$533,000	66.96%	$346,000	49.50%
						0.00%
Traceble fixed expense
Advertising	$597,000	33%	$110,000	35.14%	$243,000	30.53%	$244,000	34.91%
Salaries	$221,000	12%	$56,000	17.89%	$59,000	7.41%	$106,000	15.16%
Utilities	$39,400	2%	$9,300	2.97%	$15,900	2.00%	$14,200	2.03%
Depreciation	$88,000	5%	$25,000	7.99%	$33,000	4.15%	$30,000	4.29%
Total Traceble fixed expense	$945,400	52%	$200,300	63.99%	$350,900	44.08%	$394,200	56.39%
Regional Segment Margin	$139,600	8%	$5,700	1.82%	$182,100	22.88%	-$48,200	-6.90%
Common Fixed expense
Advertising General	$82,000.00
General Administrative expense	$63,000.00
Total Common fixed expense	$145,000.00
Net Operating income/loss	-$5,400.00