Millard Corporation is a wholesale distributor of office products. It purchases
ID: 2330054 • Letter: M
Question
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 Regional expenses (traceable): S 310,000 797,000S 697,000 Cost of goods sold Advertising Salaries Utilities Depreciation Shipping expense 91,000 101,000 58,000 8,800 24,000 242,000 244,000 55,000 16,100 29,000 311,000 243,000 112,000 13,800 28,000 36,000 743,800 00032,000 618,100 Total regional expenses 297,800 12,2001 178,900 Regional income (loss) before corporate expenses Corporate expenses: 46,800 Advertising (general) General administrative expense 17,000 19,000 36,000 $ (23,800) 40,000 19,000 59,000 36,000 19,000 55, 000 Total corporate expenses Net operating income (loss) 119,900 (101,800) The cost of goods sold and shipping expense are both variable. All other costs are fixed Required: 3. Prepare a new contribution format segmented income statement for May. (Round percentage answers to 1 decimal place.) Total Company West Central East Amount Amount Amount AmountExplanation / Answer
Total Company West Central East Amount % Amount % Amount % Amount % Sales 1804000 100.0% 310000 100.0% 797000 100.0% 697000 100.0% Variable Expense Cost of Goods sold 644000 35.7% 91000 29.4% 242000 30.4% 311000 44.6% Shipping Expense 83000 4.6% 15000 4.8% 32000 4.0% 36000 5.2% Total Variable Expense 727000 40.3% 106000 34.2% 274000 34.4% 347000 49.8% Contribution Margin 1077000 59.7% 204000 65.8% 523000 65.6% 350000 50.2% Traceable Fixed Expense Advertising 588000 32.6% 101000 32.6% 244000 30.6% 243000 34.9% Salaries 225000 12.5% 58000 18.7% 55000 6.9% 112000 16.1% Utilities 38700 2.1% 8800 2.8% 16100 2.0% 13800 2.0% Depreciation 81000 4.5% 24000 7.7% 29000 3.6% 28000 4.0% Total Traceable Fixed Expense 932700 51.7% 191800 61.9% 344100 43.2% 396800 56.9% Regional Segment Margin 144300 8.0% 12200 3.9% 178900 22.4% -46,800.00 -6.7% Common Fixed Expense Advertising (General) 93000 5.2% General Administrative expense 57000 3.2% Total Common Fixed Expense 150000 Net operating (loss) -5700