The Fellows Corporation has internal reporting for four divisions. The following data have been gathered for the year just ended.

1. Division A sells over 90% of its output to Division B on a cost-plus basis.

2. Divisions C and D share production facilities. Joint product costs, depreciation, capital expenditures, and much of the identifiable assets are allocated one-third to Division C and the remainder to Division D.

3. Unallocated corporate expenses not included above amount to $57,500.

Required:

a. From the preceding information, what are the operating segments that should be reported by the Fellows Corporation? Explain your recommendation fully.

b. Prepare a schedule of supplementary financial information by segments, in accordance with the C/CA Handbook recommendations based on the information provided above, together with a condensed consolidated income statement.

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Interdivisional sales External sales Direct divisional expenses Allocated joint costs Depreciation Capital expenditures Identifiable assets Div. A $50,000 5,000 25,000 17,500 10,000 92,500 Div. B $ 10,000 100,000 60,000 Div. C Div. D $75,000 $200,000 15,000 50,000 35,000 55,000 20,000 12,500 22,500 30,000 40,000 80,000 107,500 62,500 122,500