A company has two major business systems-Eastern and Western. In November, the E

Question

A company has two major business systems-Eastern and Western. In November, the Eastern business segment had sales revenues of $750,000 and variable expenses of $420,000. During the same month the Western business sgment had sales revenues of $380,000 and variable expenses of $240,000. Traceable fixed expenses totaled $216,000 and were allocated as 70% to Eastern and 30% to Western. Common fixed expenses totalled $295,000. Required: Prepare a segmented income statement in the contribution format for the company.

Explanation / Answer

Eastern Business Segment:

Sales Revenues 750000

Less: Variable expenses 420000

Traceable fixed expenses 151200

Net income 178800

Western Business Segment:

Sales Revenues 380000

Less: Variable expenses 240000

Traceable fixed expenses 64800

Net income 75200

total net income = 178800+75200-295000 = -41000

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