Exercise 6-7 Segmented Income Statement [LO6-4] Shannon Company segments its inc

Question

Exercise 6-7 Segmented Income Statement [LO6-4] 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, 60%, and $36,000, respectively. The North Di son's contribution margin and contribution margin ratio are$1800 and 75%, respectively. The South Division's segment margin is $50.000. The company has $90,000 of common fixed 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) Tota North South Amount Amount 0.0 0 0.0 0.0 0.0 $ 0.0 $ 0.0 0 0.0

Explanation / Answer

Solution:

Divisions Total Company North South Amount % Amount % Amount % Sales 600,000 100 240,000 100 360000 100 Variable expenses 240,000 40 60,000 25 180,000 50 Contribution margin 360,000 60 180,000 75 180,000 50 Traceable fixed expenses 260,000 43.33 130,000 54.17 130,000 36.11 Territorial segment margin 100,000 16.67 50,000 20.83 50,000 13.89 Common fixed expenses 90,000 15 Net operating income 36,000 6

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