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, continuation margin ratio, and net operating income are S500.000, 46%, and $10,000. respectively The North Division's contribution margin and contribution margin ratio are $150,000 and 50%, respectively The South Divisions segment margin is $30,000 The company has $90,000 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))

Explanation / Answer

PARTICULARS DIVISIONS Total Company North South Amount(in $) % Amount(in $) % Amount(in $) % Sales 500000 100 300000 100 200000 100 Less: Variable Cost 270000 54 150000 50 120000 60 Contribution 230000 46 150000 50 80000 40 Less:Divisional Fixed Cost 130000 80000 50000 Less: Common Fixed Cost 90000 Net Operating Income 10000

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