Question

value: 5.00 points Shannon Company seg ents its income statement in o is North and South Divisions. T e company's ove all sales con bu on margin at , and ne opera The North Division's contribution margin and contribution margin ratio are S 165,000 and 75% respective The South Division s segment margin is 46 that cannot be traced to either division. g in ome are S5 The company has 00 56, 60%, an S5600 re e s of common fixed expenses Required: Prepare an income statement for Shannon Company that uses the contr bution format and is segmented by divisions. (Do not round your intermediate percentage answers and round your final percentage answers to 1 decimal place (i.e. .1234 should be entered as 12.3).) Divisions Total Company North South Amount Amount Amount

Answer 1

Income Statement
			Divisions
	Total Company		North		South
	Amount	%	Amount	%	Amount	%
Sales	$    5,60,000.00	100.0%	$   2,20,000.00	100%	$         3,40,000.00	100.0%
Variable cost	$    2,24,000.00	40.0%	$       55,000.00	25%	$         1,69,000.00	49.7%
Contribution margin	$    3,36,000.00	60.0%	$   1,65,000.00	75%	$         1,71,000.00	50.3%
Division Fixed cost	$    2,24,000.00	40.0%	$       99,000.00	45%	$         1,25,000.00	36.8%
Segment Margin	$    1,12,000.00	20.0%	$       66,000.00	30%	$             46,000.00	13.5%
Fixed cost	$        56,000.00	10.0%
Net income	$        56,000.00	10.0%

Working

Income Statement
			Divisions
	Total Company		North		South
	Amount		Amount		Amount
Sales	560000		=165000/75%		=560000-220000
Variable cost	=560000-336000		=220000-165000		=340000-171000
Contribution margin	=560000*60%		165000		=336000-165000
Division Fixed cost	=99000+125000		=165000-66000		=171000-46000
Segment Margin	=56000+56000		=112000-46000		46000
Fixed cost	56000
Net income	56000