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 $480,000, 36%, and $9,600, respectively. The North Division's contribution margin and contribution margin ratio are $92,000 and 40%, respectively. The South Division's segment margin is $32,500. The company has $62,400 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).) Total Company Amount % North Amount Divisions South Amount % %

Answer 1

		Divisions
	Total Company		North		South
	Amount	%	Amount	%	Amount	%
Sales	480000	100.0%	230000	100.0%	250000	100.0%
Variable expenses	307200	64.0%	138000	60.0%	169200	67.7%
Contribution margin	172800	36.0%	92000	40.0%	80800	32.3%
Traceable fixed expenses	100800	21.0%	52500	22.8%	48300	19.3%
Territorial segment margin	72000	15.0%	39500	17.2%	32500	13.0%
Common fixed expenses	62400	13.0%
Net operating income	9600	2.0%