Fausnaught Corporation has two major business segments –retail and wholesale. In

Question

Fausnaught Corporation has two major business segments –retail and wholesale. In October, the retail business segment hadsales revenues of $730,000, variable expenses of $409,000, andtraceable fixed expenses of $117,000. During the same month, thewholesale business segment had sales revenues of $400,000, variableexpenses of $220,000, and traceable fixed expenses of $48,000.Common fixed expenses totaled $218,000 and were allocated asfollows: $122,000 to the retail business segment and $96,000 to thewholesale business segment.
Required :
Prepare a segmented income statement in the contribution format forthe company. Omit percentages, show only dollar amounts

Explanation / Answer

                 Fausnaught Corporation                  Income statement                  For the month ended Oct                                                     Retail                    Wholesale Sales                                         730,000                     400,000 - Variablecosts                         409,000                      220,000 ContributionMargin                  321,000                      180,000 Fixed costs TraceableF.costs                     117,000                        48,000 Common fixedcosts                 122,000    96,000 Total fixedcosts                       239,000                       144,000 OperatingIncome                      82,000    36,000

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