Reference no: EM132581796
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 $313,000 $805,000 $698,000
Regional expenses (traceable):
Cost of goods sold 98,000 236,000 311,000
Advertising 104,000 244,000 244,000
Salaries 59,000 56,000 106,000
Utilities 9,500 16,500 13,900
Depreciation 22,000 29,000 25,000
Shipping expense 13,000 34,000 37,000
Total regional expenses 305,500 615,500 736,900
Regional income (loss) before corporate expenses 7,500 189,500 (38,900)
Corporate expenses:
Advertising (general) 13,000 38,000 32,000
General administrative expense 22,000 22,000 22,000
Total corporate expenses 35,000 60,000 54,000
Net operating income (loss) $(27,500) $129,500 $(92,900)
The cost of goods sold and shipping expense are both variable. All other costs are fixed.
Required:
Question 1: Prepare new contribution format segmented income statement for May. (Round percentage answers to 1 decimal place.)