Countywide Cable Services, Inc. is organized with three segments: Metro, Suburba

Question

Countywide Cable Services, Inc. is organized with three segments: Metro, Suburban, and Outlying. Data for these segments for the year just ended follow Metro Suburban Outlying Service revenue Variable expenses Controllable fixed expenses Fixed expenses controllable by others $1,120,000 $920,000 $520,000 84,000 151,000 74,000 184,000 401,000 214,000 134,000 321,000 184,000 In addition to the expenses listed above, the company has $130,000 of common fixed expenses. Income-tax expense for the year is $330,000. Required 1. Prepare a segmented income statement for Countywide Cable Services, Inc. SEGMENTED INCOME STATEMENTS: COUNTYWIDE CABLE SERVICES, INC Segments of Company Countywide Cable Services Metro Suburban Outlying Segment contribution margin Profit margin controllable by segment manager Profit margin traceable to segment

Explanation / Answer

Prepare segment income statement :

Countywide cable service Metro Suburban Outlying Sales 2560000 1120000 920000 520000 Less: Variable expense -402000 -184000 -134000 -84000 Contribution margin 2158000 936000 786000 436000 Less: Controllable fixed expense -873000 -401000 -321000 -151000 Profit margin controlled by segment manager 1285000 535000 465000 285000 Less: Fixed expense controlled by others -472000 -214000 -184000 -74000 Profit margin traceable to segment 813000 321000 281000 211000 Less : Common expense -130000 Income before tax 683000 Less: Income tax -330000 Net income 353000

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