Problem 7-26 Restructuring a Segmented Income Statement [LO7-4]

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	$	310,000			$	798,000		$	698,000
Regional expenses (traceable):
Cost of goods sold		98,000				236,000			311,000
Advertising		105,000				238,000			243,000
Salaries		56,000				56,000			112,000
Utilities		9,100				16,000			13,800
Depreciation		24,000				32,000			29,000
Shipping expense		17,000				34,000			36,000
Total regional expenses		309,100				612,000			744,800
Regional income (loss) before corporate expenses		900				186,000			(46,800	)
Corporate expenses:
Advertising (general)		17,000				40,000			34,000
General administrative expense		21,000				21,000			21,000
Total corporate expenses		38,000				61,000			55,000
Net operating income (loss)	$	(37,100	)		$	125,000		$	(101,800	)

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.)