Kulp Corporation has two major business segments-East and West. In July, the Eas

Question

Kulp Corporation has two major business segments-East and West. In July, the East business segment had sales revenues of $900,000, variable expenses of $441,000, and traceable fixed expenses of $171,000. During the same month, the West business segment had sales revenues of $450,000, variable expenses of $234,000, and traceable fixed expenses of $45,000. The common fixed expenses totaled $321,000 and were allocated as follows: $180,000 to the East business segment and $141,000 to the West 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

East West Sales 900,000 66.67% 450,000 33.33% Variable expenses $441,000 65.33% 234,000 34.67% Traceable Fixed expenses $171,000 79.17% 450,00 20.83% Common fixed expenses $180,000 56.07% 141,000 43.93% Net Operating Income $108,000 78.26% 30,000 21.74% Total Net Operating Income = $138,000

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