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 $500,000, 50%, and $25,000, respectively. The North Division's contribution margin and contribution margin rato aresi 42,500 and 75% respectively The South Division's segment margin is $40,000. The company has $50,000 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. (Round your percentage answers to 1 decimal place (i.e -1234 should be entered as 12.3) Divisions Total Company North South Amount | % | Amount | Amount les riable expenses 0.0 00 $ 0.0 Contribution margin 0.0 0.0 raceable fixed expenses erritorial segment margin 00 $ 0.0 Common fixed expenses et operating income

Explanation / Answer

Segment margin income statement :

Divisions Total company North South Amount % Amount % Amount % Sales 500000 100% 190000 100% 310000 100% Variable expense 250000 50% 47500 25% 202500 65.3% Contribution margin 250000 50% 142500 75% 107500 34.7% Traceable fixed expense 175000 35% 107500 56.6% 67500 21.8% Territorial segment margin 75000 15% 35000 18.4% 40000 12.9% Common Fixed expense 50000 Net operating income 25000

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