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 $480,000, 36%, and $9,600, respectively. The North Division's contribution margin and contribution margin ratio are $92,000 and 40%, respectively. The South Division's segment margin is $32.500. The company has $62.400 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)) Total Company North South Amount Amount Amount

Explanation / Answer

Contribution format income statement :

Divisions Total company North South Amount % Amount % Amount % Sales revenue 480000 100% 230000 100% 250000 100% Variable cost 307200 64% 138000 60% 169200 67.7% Contribution margin 172800 36% 92000 40% 80800 32.3% Traceable fixed expense 100800 21% 52500 22.8% 48300 19.3% Segment margin 72000 15% 39500 17.2% 32500 13.0% Common Fixed expense 62400 13% Net operating income 9600 2%

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