VL.U VLY, YOU WV.L Traceable fixed expenses: Salaries 586,000 X 32.4 X 105,000 X 33.9 X 238,000 X 29.8 X 243,000 X 34.8 Utilities X 224,000 X 12.4 X 56,000 X 18.1 X 56,000 X 7.0 X 112,000 X 16.0 x Advertising X 38,900 x 2.2 9,100 2.9 16,000 X 2.0 13,800 X 2.0 Depreciation 85,000 X 4.7 X 24,000 X 7.7 X 32,000 X 4.0 29,000 X 4.2 X Total traceable fixed expenses 933,900 51.7 194,100 62.6 342,000 42.8 397,800 57.0 140,100 $ $ Regional segment margin 7.8 $ 900 0.3 186,000 23.3 (46,800) (6.8) Common fixed expenses: Advertising (general) V 91,000 X 5.0 General administration V 63,000 X 3.5 X Total common fixed expense 154,000 8.5 Net operating income (loss) $ (13,900) (0.7)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 company's first effort at preparing a segmented income statement for May is given below. Sales Region West Central East Sales $ 310,000 $ 804, 000 $ 699,000 Regional expenses ( traceable) : Cost of goods sold 90, 000 241, 000 315,000 Advertising 103, 000 243,000 242, 000 Salaries 51,000 57,000 109,000 Utilities 9 , 100 15 , 600 13,900 Depreciation 18,000 31, 000 26,000 Shipping expense 17,000 35, 000 44, 000 Total regional expenses 288, 100 622, 600 749,900 Regional income (loss ) before corporate expenses 21,900 181, 400 (50, 900) Corporate expenses: Advertising (general) 14,000 39,000 37,000 General administrative expense 20,000 20,000 20,000 Total corporate expenses 34,000 59,000 57,000 Net operating income (loss) $ (12 , 100) $ (122, 400) $ (107, 900) The cost of goods sold and shipping expense are both variable. All other costs are fixed. Danirarl.X Answer is complete but not entirely correct. Total Company West Central East Amount % Amount % Amount % Amount Sales $ 1,806,000 X 100.0 $ 100.0 $ $ 310,000 798,000 X 100.0 698,000 X 100.0 Variable expenses: Cost of goods sold 645,000 X 35.7 98,000 x 31.6 x 236,000 x 29.6 X 311,000 x 44.6 X Shipping expense 87,000 X 4.8 X 17,000 5.5 34,000 x 4.3 36,000 x 5.2 x Total variable expenses 732,000 40.5 115,000 37.1 270,000 33.9 347,000 49.8 Contribution margin 1,074,000 59.5 195,000 62.9 528,000 66.1 351,000 50.2 Traceable fixed expenses: Salaries 586,000 x 32.4 X 105,000 X 33.9 X 238,000 X 29.8 x 243,000 X 34.8 X Utilities X 224,000 X 12.4 X 56,000 X 18.1 x 56,000 X 7.0 X 112,000 x 16.0 x Advertising X 38,900 x 2.2 9,100 2.9 16,000 X 2.0 13,800 x 2.0 Depreciation 85,000 X 4.7 X 24,000 X 7.7 X 32,000 X 4.0 29,000 x 4.2 X Total traceable fixed expenses 933,900 51.7 194,100 62.6 342,000 42.8 397,800 57.0 $ Regional segment margin 140,100 7.8 $ 900 0.3 186,000 23.3 (46,800) (6.8)