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 Residential Commercial Total Sales revenue Variable expenses Contribution margin Fixed expenses Operating income $ $ 1,750,000 $3,125,000 4,875,000 3,555,000 1,320,000 1,265,000 70,000 (15,000 55,000 1,035,000 715,000 645,000 2,520,000 605,000 620,000 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

Explanation / Answer

Residential Commercial Total Sales revenue 1,750,000 3,125,000 4,875,000 Variable expenses 1,035,000 2,520,000 3,555,000 Contribution margin 715,000 605,000 1,320,000 Fixed costs : Direct fixed costs 645,000 620,000 1,265,000 Common fixed costs 125,000 125,000 250,000 Total fixed costs 770,000 745,000 1,515,000 Net income (55,000) (140,000) (195,000)

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