Question

Milard Corporation is a wholesale distributor of office products. It purchases office products from manufacturers and distributes them In the West, Central and East regions. Each of these regions is about the same size and each has its own manager and sales staff The company has been experiencing losses for many months. In an effort to improve performance, management has requested that the monthly income statement be segmented by sales region. The company's first effort at preparing a segmented income statement for May is given below. Sales Region Central 791,600 313,000 700.000 Sales Regional expenses traceable) Coat of de wid Advertising 242.000 240.000 54,000 16,200 314,000 237.000 107,000 13,600 6 10.000 760 176,00 45.00 745.650 25,600) Dilities Depreciation Shipping expense Total regional expenses Regional no (los) before corporate expenses Corporate e penet Advertising general) Denerali tative spe Total corporate expenses Het operating income (les) 38,000 33,000 5 (21.300) 120.000 (96.600) The cost of goods sold and shipping expense are both variable. All other costs are fixed. Required 3. Prepare a new contribution format segmented income statement for May (Round percentage answers to 1 decimal place) Total Company Amount West Amount Amount - Sales Variable expenses Cost of goods Shiborg experte LLLL Total variable expenses Contribution margin Trable fare expenses Advertising Depreciation TTTTT Torfaders Regional sementary Contmon fand expenses Advertising (peneral) General administrative Totalcommon feed expense Net operating Income Oss)

Answer 1

	Total Company		West		Central		East
	Amount	%	Amount	%	Amount	%	Amount	%
Sales	$        1,810,000	100.0%	$        313,000	100.0%	$        797,000	100.0%	$        700,000	100.0%
Variable expenses:
Cost of Goods sold	$            654,000	36.1%	$          98,000	31.3%	$        242,000	30.4%	$        314,000	44.9%
Shipping expense	$              92,000	5.1%	$          17,000	5.4%	$          30,000	3.8%	$          45,000	6.4%
Total Variable expenses	$            746,000	41.2%	$        115,000	36.7%	$        272,000	34.1%	$        359,000	51.3%
Contribution Margin	$        1,064,000	58.8%	$        198,000	63.3%	$        525,000	65.9%	$        341,000	48.7%
Traceable fixed expenses:
Advertising	$            582,000	32.2%	$        101,000	32.3%	$        244,000	30.6%	$        237,000	33.9%
Salaries	$            216,000	11.9%	$          55,000	17.6%	$          54,000	6.8%	$        107,000	15.3%
Utilities	$              39,100	2.2%	$            9,300	3.0%	$          16,200	2.0%	$          13,600	1.9%
Depreciation	$              83,000	4.6%	$          20,000	6.4%	$          34,000	4.3%	$          29,000	4.1%
Total traceable fixed expenses	$            920,100	50.8%	$        185,300	59.2%	$        348,200	43.7%	$        386,600	55.2%
Regional segment margin	$            143,900	8.0%	$          12,700	4.1%	$        176,800	22.2%	$        (45,600)	-6.5%
Common fixed expenses:
Avertising (general)	$              87,000	4.8%
General administrative	$              54,000	3.0%
Total common fixed expense	$            141,000	7.8%
Net operating Income (Loss)	$                2,900	0.2%