Explanation Segmented Income Statement using Variable Costing: Variable costing is used in the preparation of a segmented income statement. In this income statement, the variable expenses are recorded separately from the fixed expenses which are further divided into direct fixed expenses and common expenses. The following table represents the segmented income statement of Company K: Company K Segmented Income Statement For the Coming Year Bladders ($) Ballers ($) Total ($) Sales 80,000,000 180,000,000 260,000,000 Less variable expenses 1 : Variable cost of goods sold 10,000,000 30,000,000 40,000,000 Variable selling expense 4,000,000 9,000,000 13,000,000 Contribution margin 66,000,000 141,000,000 207,000,000 Less direct fixed expenses: Direct fixed overhead 20,000,000 100,000,000 120,000,000 Direct selling and administrative 4,000,000 10,000,000 14,000,000 Segment margin 42,000,000 31,000,000 73,000,000 Less common fixed expenses: Common fixed overhead 18,000,000 Common selling and administrative 8,000,000 Operating income 47,000,000 Table (1) Therefore, the amount of operating income is $47,000,000...

7th Edition

ISBN: 9781337116008

Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher: South Western Educational Publishing

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Chapter 8, Problem 28BEB

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Zachary Transport Company divides its operations into four divisions. A recent income statement for its West Division follows. ZACHARY TRANSPORT COMPANY West Division Income Statement for Year 3 Revenue $ 690,000 (540,000) (69,000) (89,000) (59,000) (149,000) Salaries for drivers Fuel expenses Insurance Division-level facility-sustaining costs Companywide facility-sustaining costs Net loss $(216,000) Required a. By how much would companywide income increase or decrease if West Division is eliminated? Should West Division be eliminated? b. Assume that West Division is able to increase its revenue to $780,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segment were eliminated. Should West Division be eliminated if revenue were $780,000? c. What is the minimurn amount of revenue required to justify continuing the operation of West Division? Complete this question by entering your answers in the tabs below.…

Data for January for Blondi Corporation and its two major business segments, North and South, appear below Sales revenues, North Variable expenses, North Traceable fixed expenses, North Sales revenues, South Variable expenses, South Traceable fixed expenses, South In addition, common fixed expenses totaled $179.000 and were allocated as follows: $93,000 to the North business segment and $86.000 to the South business segment. A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is: Multiple Choice $7,000) $172,000 $351,000 $496,000 $660,000 $ 383,000 $ 79,000 s 510,000 $ 291,000 $ 66,000

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Prepare a segmented income statement using variable costing for the coming year.

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Prepare a segmented income statement using variable costing for the coming year.

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