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(Solution Download) Losses have been incurred at Millard Corporation for some time. In an effort to isolate the problem


 

 

 

 

 

 

 

Losses have been incurred at Millard Corporation for some time.

 

In an effort to isolate the problem and improve the companyAc??cs

 

performance, management has requested that the monthly income

 

statement be segmented by sales region. The companyAc??cs first effort

 

at preparing a segmented statement is given below. This statement

 

is for May, the most recent month of activity.

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Region

 

 

West

 

Central

 

East

  Sales$314,000

 

   

$795,000

 

    

$700,000

 

   

  Regional expenses

 

(traceable):

 

       Cost of goods sold

91,000

 

   

244,000

 

    

314,000

 

   

 

       Advertising

108,000

 

   

240,000

 

    

238,000

 

   

 

       Salaries

56,000

 

   

58,000

 

    

106,000

 

   

 

       Utilities

9,400

 

   

16,000

 

    

14,200

 

   

 

       Depreciation

23,000

 

   

34,000

 

    

30,000

 

   

 

       Shipping expense

18,000

 

   

32,000

 

    

44,000

 

   

  Total regional

 

expenses

305,400

 

   

624,000

 

    

746,200

 

   

  Regional income

 

(loss)

 

    before corporate expenses

8,600

 

   

171,000

 

    

(46,200)

 

  

  Corporate

 

expenses:

 

       Advertising

 

(general)

14,000

 

   

40,000

 

    

37,000

 

   

 

       General administrative

 

expense

19,000

 

   

19,000

 

    

19,000

 

   

  Total corporate

 

expenses

33,000

 

   

59,000

 

    

56,000

 

   

  Net operating income

 

(loss)

$(24,400)

 

  

$112,000

 

    

$(102,200)

 

  

 

  

 

 

 

 

 

 

 

 

   Cost of goods sold and shipping expense are

 

both variable; other costs are all fixed. Millard Corporation is a

 

wholesale distributor of office products. It purchases office

 

products from manufacturers and distributes them in the three

 

regions given above. The three regions are about the same size, and

 

each has its own manager and sales staff. The products that the

 

company distributes vary widely in profitability.

 

 

  

 

 

 

 

 

 

 

Required:

 

 

 

 

 

 

 

 

 

 

 

 

3.

 

Prepare a new contribution format segmented income statement for

 

May. Show a Total column as well as data for each region. In

 

addition, for the company as a whole and for each sales region,

 

show each item on the segmented income statement as a percent of

 

sales. (Note: % columns may not total due to rounding.)

 

Round percentage answers to 1 decimal place (i.e .1234

 

should be entered as 12.3). ** I have to fill in the side labesl as

 

well!**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

West

 

Central

 

East

 

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

Sales

 

$1,809,000

 

100.0

 

$314,000

 

 

$795,000

 

 

$700,000

 

Variable

 

expenses:

 

Cost of goods sold

 

649,000

 

 

91,000

 

 

244,000

 

 

314,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

variable expenses

 

100.0

 

Traceable

 

fixed expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

traceable fixed expenses

Common

 

fixed expenses:

 

 

 

 

 

Total

 

common fixed expense

Net operating

 

income (loss)

 

 


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