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 $600,000, 50%, and $50,000, respectively. The North Division's contribution margin and contribution margin ratio are $150,000 and 75%, respectively. The South Division's segment margin is $70,000. The company has $60,000 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

Explanation / Answer

Total Company North Segment South Segment Amount % Amount % Amount % Sales revenue 600000 100% 200000 33.33% 400000 66.67% Less: Variable cost 300000 100% 50000 16.67% 250000 83.33% Contribution income 300000 100% 150000 50% 150000 50% Less: Traceable Fixed cost 190000 100% 110000 57.89% 80000 42.11% Segment Margin 110000 100% 40000 36.36% 70000 63.64% Less: Common Fixed cost 60000 Net Income 50000

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