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 $500,000, 46%, and $10,000, respectively. the north division’s contribution margin and contribution margin ratio are $150,000 and 50%, respectively. the south division’s segment margin is $30,000. the company has $90,000 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. in addition, for the company as a whole and for each segment, show each item on the segmented income statements as a percent of sales. (round your percentage answers to 1 decimal place (i. e .1234 should be entered as 12.3))

                              NorthSouth      Total

Sales                  300,000(D)200,000 (E)        500,000

Variable                  -150,000(G)-120,000(H)  -270,000(B)

Contribution            150,000 80,000 (F)          230,000(A)

Traceable Fixed    -80,000(J)-50,000(I)          -130,000 (C)

Business Fixed Cost                             -90, 000

Income                      70,000(K)30,000             10, 000

Explanation:

On the order of how to calculate eahc value I will be explaining how to build the income statement

bold are givens.

(A) overal sales 500,000 and contribution margin ratio of 46%

sales x CMR = contribution margin

500,000 x 46% = 230,000

(B) sales - variable cost = contribution margin

   500,000 - variable cost = 230,000

   500,000 - 246,000 = variable cost = 270,000

(C) we need a net operating income of 10,000

contribution - fixed cost = operating income

contribution  - tracable fixed csot - business fixed cost = operating income

230,000 - tracable cost - 90,000 = 10,000

230,000 - 90,000 - 10,000 = tracable  cost = 130,000

(D) and (E)

North CMR equal to .50 and CM equal to 150,000

sales x CMR = CM

sales x 0.5 = 150,000 = 150,000/0.50 = 300,000

total sales = north sales + south sales

total sales are 500,000 and north sales are 300,000

500,000 - 300,000 = 200,000 south sales

(F) total CM = north CM + South CM

total contribution 230,000 north contribution 150,000

230,000 - 150,000 = 80,000 contribution

(G) (H)

sales - variable cost = cm

sales - cm = variable cost

north 300,000 - 150,000 = 150,000

south 200,000 - 80,000 = 120,000

(I) (J)

we know that segment margin is 30,000 for south so

CM - fixed cost for south = 30,000

80,000 - south fixed = 30,000

south = 50,000

Then we calculate tracable fixed cost for north

total tracable cost 130,000

south = 50,000

130,000 - 50,000 = 80,000 fixed for north

(K) last, we know that CM for noth is 150,000 and it has 80,000 fixed csot

their segment income is 150,000 - 80,000  = 70,000

answer; the correct answer should be (demonstrations); good luck

none

explanation:

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