Problem 6-26 (Algo) Restructuring a Segmented Income Statement [LO6-4]

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	$ 311,000	$ 805,000	$ 703,000
Regional expenses (traceable):
Cost of goods sold	90,000	237,000	317,000
Advertising	108,000	242,000	236,000
Salaries	59,000	55,000	110,000
Utilities	9,400	15,800	14,400
Depreciation	20,000	34,000	27,000
Shipping expense	15,000	29,000	42,000
Total regional expenses	301,400	612,800	746,400
Regional income (loss) before corporate expenses	9,600	192,200	(43,400)
Corporate expenses:
Advertising (general)	13,000	38,000	33,000
General administrative expense	19,000	19,000	19,000
Total corporate expenses	32,000	57,000	52,000
Net operating income (loss)	$ (22,400)	$ (135,200)	$ (95,400)

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. (Round percentage answers to 1 decimal place.)

Total Company Wont Contral East Amount % Amount % Amount % Amount % Variable expenses Total variable expenses Traceable fixed expenses: Total traceable fixed expenses Common fixed expenses: Total common fixed expense Net operating income (loss)