PROBLEM 13-30 Restructuring a Segmented Income Statement [LO1] Losses have been incurred at Millard Corporation for some time. In an effort to isolate the problem and improve the company's performance, management has requested that the monthly income statement be segmented by sales region. The company's first effort at preparing a segmented state- ment is given below. This statement is for May, the most recent month of activity. Sales Region West Central East Sales $450,000 S800,000 $ 750,000 Regional expenses (traceable): Cost of goods sold Advertising Salaries 376,500 162,900 108,000 280,000 210,000 135,000 15,000 30,000 28,500 200,000 90,000 88,000 Utilities 13,500 12,000 Depreciation. Shipping expense. 27,000 28,000 32,000 17,100 Total regional expenses. 418,500 640,000 795,000 Regional income (loss) before corporate expenses 31,500 160,000 (45,000) Corporate expenses: Advertising (general) General administrative expense. 18,000 32,000 30,000 50,000 50,000 50,000 Total corporate expenses. 68,000 82,000 80,000 Net operating income (loss). $ (36.500) $ 78,000 $(125,000) 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. fiequired: 1 List any disadvantages or weaknesses that you see to the statement format illustrated above. * Explain the basis that is apparently being uscd to allocate the corporate expenses to the fegions. Do you agree with these allocations? Explain. Prepare a new contribution format segmented income statement for May. Show a Total column as well as data for cach region. In addition, for the company as a whole and for cach sales region, show each item on the segmented income statement as a percent of sales. Analyze the statement that you prepared in part (3) above. What points that nmight help to miprove the company's performance would you bring to management's attention?