Shannon Company segments its income statement into its North and South Divisions

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 $650,000, 40%, and $13,000, respectively. The North Division's contribution margin and contribution margin ratio are $110,000 and 44%, respectively. The South Division's segment margin is $60,000. The company has $97,500 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) Divisions Total Company North South Amount Amount Amount Sales ariable expenses Contribution margin Traceable fixed expenses Territorial segment margin Common fixed expenses Net operating income

Explanation / Answer

Answer:-

Shannon Company Income Statement (Contribution Format) Divisons Total Company North South Particulars Amonut % Amonut % Amonut % $ $ $ Sales 650000 100 110000/44%=250000 100 650000-250000=400000 100 Less:- Variable expenses 650000*60%=390000 60 250000-110000=140000 56 400000*60%=240000 60 Contribution Margin 650000*40%=260000 40 110000 44 100000+60000=160000 40 Less:-Traceble fixed expenses 260000-110500=149500 23 110000-50500=59500 23.8 100000 25 Territorial segment margin 110500 17 110500-60000=50500 20.2 60000 15 Less:-Common fixed expenses 97500 15 Net opreating income 13000 2

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