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	$	311,000			$	800,000		$	696,000
Regional expenses (traceable):
Cost of goods sold		94,000				237,000			319,000
Advertising		104,000				236,000			241,000
Salaries		57,000				55,000			109,000
Utilities		9,300				16,300			14,100
Depreciation		25,000				33,000			26,000
Shipping expense		13,000				32,000			43,000
Total regional expenses		302,300				609,300			752,100
Regional income (loss) before corporate expenses		8,700				190,700			(56,100	)
Corporate expenses:
Advertising (general)		14,000				39,000			37,000
General administrative expense		22,000				22,000			22,000
Total corporate expenses		36,000				61,000			59,000
Net operating income (loss)	$	(27,300	)		$	129,700		$	(115,100	)

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.) Total Company Amount % West Amount Central Amount East Amount % % Variable expenses Total variable expenses Traceable fixed expenses: Total traceable fixed expenses Common fixed expenses: Total common fixed expense Net operating income (loss)