Austin Industries has two divisions: Dallas Division and Houston Division. Information relating to the divisions for the current year is as follows:

Fixed expenses (common) that cannot be identified directly with either division but which are necessary for the operation of the company amounted to $200,000.

Required:
1. Prepare income statements segmented by division. Include the total column.
2. Given the analysis in above, what actions should the company consider in order enhancing its ‘bottomline'.

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TOmaha Kansas City Dallas Houston Units produced and sold Selling price per unit S 22.00 S25.00 S30.00 S 25.00 Variable expenses per unit S 15.00 5 22.00 2000 15,00 S 20.00 Direct fixed expenses S 137,500 S 100,000 S 125,000 S 145,000