Problem 6-26 (Algo) Restructuring a Segmented Income Statement [LO6-4]

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 companys first effort at preparing a segmented income statement for May is given below.

	Sales Region
	West	Central	East
Sales	$ 313,000	$ 796,000	$ 704,000
Regional expenses (traceable):
Cost of goods sold	96,000	236,000	311,000
Advertising	109,000	237,000	236,000
Salaries	58,000	54,000	115,000
Utilities	8,900	16,300	14,200
Depreciation	18,000	29,000	29,000
Shipping expense	16,000	33,000	43,000
Total regional expenses	305,900	605,300	748,200
Regional income (loss) before corporate expenses	7,100	190,700	(44,200)
Corporate expenses:
Advertising (general)	17,000	37,000	33,000
General administrative expense	21,000	21,000	21,000
Total corporate expenses	38,000	58,000	54,000
Net operating income (loss)	$ (30,900)	(132,700)	$ (98,200)

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.)

Required: 3. Prepare a new contribution format segmented income statement for May. (Round percentage answers to 1 decimal place.) East Total Company Amount % West Amount Central Amount % % Amount % Variable expenses Total variable expenses Traceable fixed expenses: Total traceable fixed expenses Common fixed expenses: Total common fixed expense Net operating income (loss)