The following data pertain to the operating revenues and expenses for California, Inc. for 20xx.

Los Angeles LA) Segment San Fransico (SF) segment Total Total

Sale $180,000 $360,000 $ 540,000

Variable expense 96,000 240,000 336,000

Direct fixed expense 24,000 30,000 54,000

Indirect fixed expense 72,000 Asset (investment) used to generate operating income for the two segments are shown below.

Los Angeles Segment San Francisco Segment

$180,000 $360,000

Asset directly used by and identified with the segment.

a. Prepare a segment income statement in a good format showing the contribution margin of each segment, the contribution to indirect expenses of each segment, and total income of California, Inc.

b. Determine the return on investment for evaluating (1) the earning power of the entire company and (2) the performance of each segment.

c. Comment on the results of part (b).