Question

Millard 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. Sale Region Central $ 311.000 $ 699.000 34.000 103.000 59,000 8.900 21.000 titles Salop Tegional exper traceable) Court of oude zold Advertising Salariez Depreciation Shipping expense Total regional expenses Parimal income oux) before carporate Experte Corporate expanded Adrertizing all General administrative expande Total corporate expenses Het operating incon (los) 299,000 239.000 52,000 15.500 31,000 33.000 609.500 L23.500 317,000 240.000 109,000 14.000 25,000 41.000 740,00 (47.000 2.000 12.200 12,000 21.00 37,000 21.000 59.000 $ 136,500 30,000 21.000 59.000 (10,000) $(20, 800) 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 Central Amount East Amount % Variable expenses Total variable expenses 00 0 0 00 00 0 0 00 00 0 0 000 00 0 0 00

Answer 1

		Total Company		West		Central		East
		Amount	%	Amount	%	Amount	%	Amount	%
	Sales	$        18,12,000	100.0%	$ 3,11,000	100.0%	$            8,02,000	100.0%	$     6,99,000	100.0%
Less:	Variable expenses:
	Cost of goods sold	$          6,50,000	35.9%	$     94,000	30.2%	$            2,39,000	29.8%	$     3,17,000	45.4%
	Shipping expenses	$              87,000	4.8%	$     13,000	4.2%	$               33,000	4.1%	$        41,000	5.9%
	Total variable expenses	$          7,37,000	40.7%	$ 1,07,000	34.4%	$            2,72,000	33.9%	$     3,58,000	51.2%
	Total Contribution margin (loss)	$        10,75,000	59.3%	$ 2,04,000	65.6%	$            5,30,000	66.1%	$     3,41,000	48.8%
Less:	Traceable Fixed expenses:
	Advertising	$          5,81,000	32.1%	$ 1,03,000	33.1%	$            2,38,000	29.7%	$     2,40,000	34.3%
	Salaries	$          2,20,000	12.1%	$     59,000	19.0%	$               52,000	6.5%	$     1,09,000	15.6%
	Utilities	$              38,300	2.1%	$       8,800	2.8%	$               15,500	1.9%	$        14,000	2.0%
	Depreciation	$              77,000	4.2%	$     21,000	6.8%	$               31,000	3.9%	$        25,000	3.6%
	Total traceable fixed expenses	$          9,16,300	50.6%	$ 1,91,800	61.7%	$            3,36,500	42.0%	$     3,88,000	55.5%
	Regional Income (loss) before corporate expense	$          1,58,700	8.8%	$     12,200	3.9%	$            1,93,500	24.1%	$       -47,000	-6.7%
Less:	Common fixed expense:
	Advertising (general)	$              87,000	4.8%
	General administrative expenses	$              63,000	3.5%
	Total common fixed expenses	$          1,50,000	8.3%
	Net operating income (loss)	$                8,700	0.5%