70.2K

Verified Solution

Link Copied!

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 companys first effort at preparing a segmented income statement for May is given below.

	Sales Region
	West				Central			East
Sales	$	314,000			$	802,000		$	705,000
Regional expenses (traceable):
Cost of goods sold		94,000				241,000			314,000
Advertising		104,000				238,000			243,000
Salaries		52,000				56,000			114,000
Utilities		8,800				15,500			14,300
Depreciation		22,000				31,000			27,000
Shipping expense		14,000				33,000			38,000
Total regional expenses		294,800				614,500			750,300
Regional income (loss) before corporate expenses		19,200				187,500			(45,300	)
Corporate expenses:
Advertising (general)		16,000				42,000			34,000
General administrative expense		20,000				20,000			20,000
Total corporate expenses		36,000				62,000			54,000
Net operating income (loss)	$	(16,800	)		$	125,500		$	(99,300	)

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 West Central East Amount % Amount % Amount % Amount % Sales Variable expenses: Cost of goods sold Shipping expense Total variable expenses 0 0.0 0 0.0 0 0.0 0 0.0 Contribution margin 0 0.0 0 0.0 0 0.0 0 0.0 Traceable fixed expenses: Advertising Salaries Utilities Depreciation Total traceable fixed expenses 0 0.0 0 0.0 0 0.0 0 0.0 Regional segment margin 0 0.0 $0 0.0 $0 0.0 $0 0.0 Common fixed expenses: Advertising General administration Total common fixed expense 0 0.0 Net operating income (loss) $0 0.0

Answer & Explanation Solved by verified expert

See Answer