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P.s The cost of goods sold , and shipping expenses are both variable. All other costs are fixed.

Segment Reporting Olney 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 company's first effort at preparing a segmented income statement for May is given below. Sales Region West Central East Sales $ 313,000 $ 797,000 $702,000 Regional expenses (traceable): Cost of goods sold 93,000 243,000 318,000 Advertising 104,000 242,000 240,000 Salaries 60,000 56,000 106,000 Utilities 8,600 16,300 13,500 Depreciation 21,000 33,000 29,000 Shipping expense 12,000 29,000 44,000 Total regional expenses 298,600 619,300 750,500 Regional income (loss) before corporate expenses 14,400 177,700 (48,500) Corporate expenses: Advertising (general) 16,000 42,000 35,000 General administrative expense 19,000 19,000 19,000 Total corporate expenses 35,000 61,000 54,000 Net operating income (loss) $ (20,600) 116,700 $ (102,500) Required: 1. List any weaknesses that you see in the company's segmented income statement shown above. 2. Explain the basis that is apparently being used to allocate the corporate expenses to the regions. Do you agree with these allocations? Explain