Question

Data for January for Bondi Corporation and its two major business segments, North and South, appear below:

Sales revenues, North	$	554,000
Variable expenses, North	$	321,500
Traceable fixed expenses, North	$	66,300
Sales revenues, South	$	428,000
Variable expenses, South	$	244,200
Traceable fixed expenses, South	$	55,400

In addition, common fixed expenses totaled $150,200 and were allocated as follows: $78,000 to the North business segment and $72,200 to the South business segment.

A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is:

• $88,200

• $321,500

• $166,200

• $154,500

Answer 1

Solution:

Bondi Corporation		Segments
	Total company	North	South
	Amount	Amount	Amount
Sales	$982,000.00	$554,000.00	$428,000.00
less:Variable Expense	$565,700.00	$321.500.00	$244,200.00
Contribution Margin	$416,300.00	$232,500.00	$183,800.00
Traceable Fixed expenses	$121,700.00	$66,300.00	$55,400.00
Office Segment Margin	$280,600.00	$166,200.00	$128,400.00
Common Fixed Costs	$150,200.00
Net Operating Income	$150,200.00

From above segmented income statement, Segment margin of North Business Segment = $166,200