Question

Countywide Cable Services, Inc. is organized with three segments: Metro, Suburban, and Outlying. Data for these segments for the year just ended follow.

  

	Metro			Suburban			Outlying
Service revenue	$	1,030,000		$	830,000		$	430,000
Variable expenses		166,000			116,000			66,000
Controllable fixed expenses		374,000			294,000			124,000
Fixed expenses controllable by others		196,000			166,000			56,000

  

In addition to the expenses listed above, the company has $85,000 of common fixed expenses. Income-tax expense for the year is $285,000.

  

Required:

1. Prepare a segmented income statement for Countywide Cable Services, Inc.

	SEGMENTED INCOME STATEMENTS: COUNTYWIDE CABLE SERVICES, INC. Segments of Company Countywide Cable Services Metro Suburban Outlying Segment contribution margin Profit margin controllable by segment manager Profit margin traceable to segment

Answer 1

Prepare segment income statement :
	Countywide cable service	Metro	Suburban	Outlying
Sales	$      2,290,000	$     1,030,000	$       830,000	$       430,000
Less: Variable expense	$        (348,000)	$       (166,000)	$     (116,000)	$       (66,000)
Contribution margin	$      1,942,000	$        864,000	$       714,000	$       364,000
Less: Controllable fixed expense	$        (792,000)	$       (374,000)	$     (294,000)	$     (124,000)
Profit margin controlled by segment manager	$      1,150,000	$        490,000	$       420,000	$       240,000
Less: Fixed expense controlled by others	$        (418,000)	$       (196,000)	$     (166,000)	$       (56,000)
Profit margin traceable to segment	$         732,000	$        294,000	$       254,000	$       184,000
Less : Common fixed expense	$          (85,000)
Income before tax	$         647,000
Less: Income tax	$        (285,000)
Net income	$         362,000