Shannon Company segments its income statement into its North and South Divisions
ID: 2472665 • 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 $600,000, 50%, and $50,000, respectively. The North Division’s contribution margin and contribution margin ratio are $150,000 and 75%, respectively. The South Division’s segment margin is $70,000. The company has $60,000 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))
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 $600,000, 50%, and $50,000, respectively. The North Division’s contribution margin and contribution margin ratio are $150,000 and 75%, respectively. The South Division’s segment margin is $70,000. The company has $60,000 of common fixed expenses that cannot be traced to either division.
Explanation / Answer
Divisions
Total Company
North
South
Particulars
Amount
%
Amount
%
Amount
%
Sales
600,000
100
200,000
100
400,000
100
Less : Variable Cost
300,000
50
50,000
25
250,000
62.5
Contribution
300,000
50
150,000
75
150,000
37.5
Less Traceble Fixed Cost
190,000
110,000
80,000
Territorial Segment Margin
110,000
40,000
70,000
Less Common Fixed Cost
60,000
Net Operating Income
50,000
Divisions
Total Company
North
South
Particulars
Amount
%
Amount
%
Amount
%
Sales
600,000
100
200,000
100
400,000
100
Less : Variable Cost
300,000
50
50,000
25
250,000
62.5
Contribution
300,000
50
150,000
75
150,000
37.5
Less Traceble Fixed Cost
190,000
110,000
80,000
Territorial Segment Margin
110,000
40,000
70,000
Less Common Fixed Cost
60,000
Net Operating Income
50,000
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