The Porter Sales Company has three divisions. The following information is available for the year ended December 31, 2004:

The sales for the company are \($100,000\) for Division 101, and \($100,000\) for Division 202, and \($200,000\) for Division 303. Variable costs for Division 101 are \($50,000\), variable costs for Division 202 are \($60,000\), and variable costs for Division 303 are $110,000.

Direct fixed costs of Division 101 are \($20,000\), direct fixed costs of Division 202 are \($30,000\), and direct fixed costs of Division 303 are \($50,000\). The company allocates common fixed costs to segments based on relative sales. Common fixed costs for the company are $40,000.

Required:

a. Prepare a segment income statement for the company, which distributes common fixed costs to segments based on relative sales. Your answer should include a column for the total company and columns for each segment.

b. Based on your answer for part a, does it appear that one of the segments should be closed?

c. Prepare a segment income statement for the company which does not distribute common fixed cost to segments. Your answer should include a column for the total company and columns for each segment.

d. Based on your answer for part c, does it still seem that one of the segments should be closed?