Ferrar Corporation has two major business segments: Consumer and Commercial. Dat

Question

Ferrar Corporation has two major business segments: Consumer and Commercial. Data for the segments and for the company for March appear below: Sales revenues, Consumer $ 680,000 Sales revenues, Commercial $ 280,000 Variable expenses, Consumer $ 394,000 Variable expenses, Commercial $ 143,000 Traceable fixed expenses, Consumer $ 102,000 Traceable fixed expenses, Commercial $ 45,000 In addition, common fixed expenses totaled $210,000 and were allocated as follows: $122,000 to the Consumer business segment and $88,000 to the Commercial business segment. A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:

Explanation / Answer

Income statement

Consumer Commercial Company Sales revenues 680,000 280,000 960,000 Variable expenses 394,000 143,000 537,000 Contribution margin 286,000 137,000 423,000 Fixed cost : Direct fixed costs 102,000 45,000 147,000 Common fixed costs 122,000 88,000 210,000 Total fixed costs 224,000 133,000 357,000 Net income 62,000 4,000 66,000

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