(Solved): Shannon Company segments its income statement into its North and South Divisions. The company’s overal

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
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