Exercise 6-7 Segmented Income Statement [LO6-4]

Shannon Company segments its income statement into its North and South Divisions. The companys overall sales, contribution margin ratio, and net operating income are $420,000, 50%, and $21,000, respectively. The North Divisions contribution margin and contribution margin ratio are $112,500 and 75%, respectively. The South Divisions segment margin is $35,000. The company has $63,000 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))

Divisions Total Company North South Amount Amount Amount % Sales 420,000 100.0 420,000 100.0 270,000 100.0 Variable expenses 382,500 50.0 150,000 25.0 210,000 Contribution margin 210,000 50.0 270,000 75.0 (112,500) 100.0 Traceable fixed expenses 210,000 37,500 50,000.0 Territorial segment margin (49,925.0) (112,500) 100.0 50,0 60,000 172,500 Common fixed expenses 63,000 Net operating income $ 109,500 50.0