Jane Baldwin, Anderson Flooring\'s accounting intern, has prepared the following

Question

Jane Baldwin, Anderson Flooring's accounting intern, has prepared the following income statement for the month of June Sales revenue Variable expenses Contribution margin Fixed expenses Operating income$ Residential Commercial 3,125,000 2,520,000 1,750,000 1,035,000 715,000 645,000 Total 4,875,000 3,555,000 1,320,000 1,265,000 605,000 620,000 (15,000) 55,000 70,000 $ In preparing the income statement, Jane was unsure what to do with $250,000 in corporate fixed expenses that cannot be traced to a particular division. Since these costs were incurred to run the business as a whole, and she believed that each division benefited equally, she just allocated half to each division. Prepare a segment margin income statement that highlights each division's contribution to corporate profits. (If the amount is negative then enter with a negative sign preceding the number e.g. -5,125 or parenthesis. e.g. (5,125).) Residential Commercial Total Sales revenue 1750000 3125000 4875000 Variable expenses 1035000 2520000 3555000 Contribution margin 715000 605000 1320000 Traceable fixed expenses 520000 495000 1,265,000 Segment margin 195000 110000 55000 Common fixed expenses 250000 Operating income 195000

Explanation / Answer

Total Contribution margin $1,320,000 Traceable fixed expenses $1,015,000 Segment margin $305,000 Common fixed expenses $25,000 Operating income $280,000

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