Shannon Company segments its income statement into its North and South Divisions
ID: 2463226 • Letter: S
Question
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 $680,000, 60%, and $40,800, respectively. The North Division's contribution margin and contribution margin ratio are $210,000 and 75%, respectively. The South Division's segment margin is $58,000. The company has $68,000 of common fixed expenses that cannot be traced to either division. Prepare an income statement for Shannon Company that uses the contribution format and is segmented by divisions. (Round your percentage answers to 1 decimal place (i.e.1234 should be entered as 12.3))Explanation / Answer
Divisions
Total Company
North
South
Particulars
Amount
%
Amount
%
Amount
%
Sales
680,000
100
280,000
100
400,000
100
Less : Variable Cost
272,000
40
70,000
25
202,000
50.5
Contribution
408,000
60
210,000
75
58,000
14.50%
Less Traceble Fixed Cost
Less Common Fixed Cost
68,000
Net Operating Income
340,000
North sales= Contribution Margin/ Contribution Margin Ratio
=210,000/75%=$280,000
Divisions
Total Company
North
South
Particulars
Amount
%
Amount
%
Amount
%
Sales
680,000
100
280,000
100
400,000
100
Less : Variable Cost
272,000
40
70,000
25
202,000
50.5
Contribution
408,000
60
210,000
75
58,000
14.50%
Less Traceble Fixed Cost
Less Common Fixed Cost
68,000
Net Operating Income
340,000
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