Problem 6-26 (Algo) Restructuring a Segmented Income Statement [LO6-4] Millard Corporation is a wholesale distributor...
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Problem 6-26 (Algo) Restructuring a Segmented Income Statement [LO6-4]
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
$ 311,000
$ 798,000
$ 698,000
Regional expenses (traceable):
Cost of goods sold
93,000
241,000
315,000
Advertising
104,000
238,000
243,000
Salaries
59,000
59,000
109,000
Utilities
9,100
16,300
14,400
Depreciation
20,000
35,000
29,000
Shipping expense
15,000
31,000
37,000
Total regional expenses
300,100
620,300
747,400
Regional income (loss) before corporate expenses
10,900
177,700
(49,400)
Corporate expenses:
Advertising (general)
18,000
38,000
33,000
General administrative expense
20,000
20,000
20,000
Total corporate expenses
38,000
58,000
53,000
Net operating income (loss)
$ (27,100)
$ 119,700
$ (102,400)
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.)
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