Exercise 6-7 Segmented Income Statement [LO6-4] Shannon Company segments its inc

Question

Exercise 6-7 Segmented Income Statement [LO6-4]

Shannon Company segments its income statement into its North and South Divisions. The company’s overall sales, contribution margin ratio, and net operating income are $490,000, 38%, and $9,800, respectively. The North Division’s contribution margin and contribution margin ratio are $100,800 and 42%, respectively. The South Division’s segment margin is $35,000. The company has $68,600 of common fixed expenses that cannot be traced to either division.

Required:

Prepare an income statement for Shannon Company that uses the contribution format and is segmented by divisions. In addition, for the company as a whole and for each segment, show each item on the segmented income statements as a percent of sales. (Round your percentage answers to 1 decimal place (i.e .1234 should be entered as 12.3).)

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Total North South Sales North =100800/42% South = 490,000 - 240,000         490,000.00         240,000.00         250,000.00 Variable costs= Total 490,000*62% North = 240,000 - 100800 South = 303800 - 139200         303,800.00         139,200.00         164,600.00 Contribution = Total = 490,000*38% South =186200 - 100800         186,200.00         100,800.00           85,400.00 Less Fixed costs South =85400 - 35000 North = 100800 -43400 Total =186200 - 78400         107,800.00           57,400.00           50,400.00 Segment Margin Total= 68600 + 9800 North =78400 -35000           78,400.00           43,400.00           35,000.00 Fixed costs           68,600.00 Net operating income              9,800.00

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