Ulls are necessary. In each year under absorption costing? No com- "pany PROBLEM 4-26 Restructuring a Segmented Income Statement 104-4 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 perfor- mance, 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 $450,000 $800,000 $750,000 Sales ... Regional expenses (traceable): Cost of goods sold Advertising Salaries Utilities Depreciation... Shipping expense Total regional expenses. Regional income (loss) before corporate expenses Corporate expenses: Advertising (general). General administrative expense. Total corporate expenses Net operating income (loss). 162,900 108,000 90,000 13,500 27,000 17,100 418,500 280,000 200,000 88,000 12,000 28,000 32,000 640,000 160,000 376,500 210,000 135,000 15,000 30,000 28,500 795,000 (45,000) 31,500 18,000 50,000 68,000 $ (36,500) 32,000 50,000 82,000 $ 78,000 30,000 50,000 80,000 $(125,000) The cost of goods sold and shipping expense are both variable. All other costs are fixed. Required: 1. List any weaknesses that you see in the company's segmented income statement given 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. 3. Prepare a new contribution format segmented income statement for May. Show a Total col- umn as well as data for each region. In addition, for the company as a whole and for each sales region, show each item on the segmented income statement as a percent of sales. 4. Analyze the statement that you prepared in part (3) above. What insights do those statements reveal that you would bring to management's attention