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shannon company segments its income statement into its North and South Divisions. The company's overall sales,...

shannon company segments its income statement into its North and South Divisions. The company's overall sales, contribution margin ration, and net operating income are $1,020,000, 38%, and $20,400 respectively. The North Division's contribution margin and contribution margin ratio are $142,800 and 42% respectively. The south Division's segment margin is $163,200. The company has $244,800 of common fixed expenses that cannot be traced to either divisions. Prepare an income statement for Shannon Company that uses the contribution format and is segmented by division. In addition, for the company as whole and for each segment show each item on the segmented income statements as percent of sales.

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Expert Solution

Total Company

North

South

Sales

$1,020,000

100.0%

$340,000

100.0%

$680,000

100.0%

Variable Cost

$632,400

62.0%

$197,200

58.0%

$435,200

64.0%

Contribution margin

$387,600

38.0%

$142,800

42.0%

$244,800

36.0%

Traceable Fixed Expenses

$122,400

12.0%

$40,800

12.0%

$81,600

12.0%

Segment Margin

$265,200

26.0%

$102,000

30.0%

$163,200

24.0%

Common Fixed expenses

$244,800

24.0%

Net Income

$20,400

2.0%

--Working

Total Company

North

South

Sales

1020000

100.0%

=142800/42%

100.0%

=1020000-340000

100.0%

Variable Cost

=1020000-387600

62.0%

=340000-142800

58.0%

=632400-197200

64.0%

Contribution margin

=1020000*38%

38.0%

142800

42.0%

=387600-142800

36.0%

Traceable Fixed Expenses

=387600-265200

12.0%

=142800-102000

12.0%

=244800-163200

12.0%

Segment Margin

=244800+20400

26.0%

=265200-163200

30.0%

163200

24.0%

Common Fixed expenses

244800

24.0%

Net Income

20400

2.0%

ekkarill92 answered 6 months ago
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