Millard Corporation is a wholesale distributor of office products. It purchases office products from manufacturers and distributes them in the West, Central, and East regions. Each of these regions is about the same size and each has its own manager and sales staff.

The company has been experiencing losses for many months. In an effort to improve performance, management has requested that the monthly income statement be segmented by sales region. The companys first effort at preparing a segmented income statement for May is given below.

Sales Region

West Central East Sales$314,000 $800,000 $699,000 Regional expenses (traceable): Cost of goods sold 92,000 236,000 313,000 Advertising 103,000 239,000 237,000 Salaries 53,000 50,000 107,000 Utilities 9,000 16,300 14,200 Depreciation 22,000 32,000 28,000 Shipping expense 14,000 32,000 37,000 Total regional expenses 293,000 605,300 736,200 Regional income (loss) before corporate expenses 21,000 194,700 (37,200)Corporate expenses: Advertising (general) 16,000 39,000 37,000 General administrative expense 19,000 19,000 19,000 Total corporate expenses 35,000 58,000 56,000 Net operating income (loss)$(14,000) $136,700 $(93,200)

The cost of goods sold and shipping expense are both variable. All other costs are fixed.

Required:

3. Prepare a new contribution format segmented income statement for May.