Digital Software, Inc., has two product lines. The income statement for the year ended December 31 shows

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Digital Software, Inc., has two product lines. The income statement for the year ended December 31 shows the following:


Digital Software, Inc., has two product lines. The income statem


The products, Num 1 and Num 2, are sold in two territories,
North and South, as follows:

Digital Software, Inc., has two product lines. The income statem


The common fixed expenses are traceable to each territory as follows:
North fixed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,000
South fixed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Home office administrative fixed expenses . . . . . . . . . . . . 20,000
Total common fixed expenses . . . . . . . . . . . . . . . . . . . . . $120,000
The direct expenses of Num 1, $160,000, and of Num 2, $140,000, are not identifiable with either of the two territories.
Required:
1. Prepare income statements for the year, segmented by territory and including a column for the entire company.
2. Why are direct expenses of one type of segment report not direct expenses of another type of segmentreport?

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Principles Of Cost Accounting

ISBN: 9780840037039

15th Edition

Authors: Edward J. Vanderbeck

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