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| 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 $480,000, 60%, and $48,000, respectively. The North Division’s contribution margin and contribution margin ratio are $135,000 and 75%, respectively. The South Division’s segment margin is $38,000. The company has $72,000 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)) |
Expert Answer
PREPARE CONTRIBUTION MARGIN FORMAT INCOME STATEMENT :
| OVERALL | NORTH | SOUTH | |
| Sales | 480000 | 180000 | 300000 |
| Less; Variable cost | (192000) | (45000) | (147000) |
| Contribution margin | 288000 | 135000 | 153000 |
| Less; Traceable fixed expenses | (168000) | (53000) | (115000) |
| overall margin | 120000 | 82000 | 38000 |
| Less: Common fixed expenses | (72000) | ||
| Net operating income | 48000 |
