Question

Data for January for Bondi Corporation and its two major business segments, North and South, appear below: Sales revenues, North $ 660,000 Variable expenses, North $ 383,000 Traceable fixed expenses, North $ 79,000 Sales revenues, South $ 510,000 Variable expenses, South $ 291,000 Traceable fixed expenses, South $ 66,000 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 segment margin of the North business segment is:

Answer 1

Solution:

Bondi Corporation		Segments
	Total company	North	South
	Amount	Amount	Amount
Sales	$11,70,000.00	$6,60,000.00	$5,10,000.00
less:Variable Expense	$6,74,000.00	$3,83,000.00	$2,91,000.00
Contribution Margin	$4,96,000.00	$2,77,000.00	$2,19,000.00
Traceable Fixed expenses	$1,45,000.00	$79,000.00	$66,000.00
Office Segment Margin	$3,51,000.00	$1,98,000.00	$1,53,000.00
Common Fixed Costs	$1,79,000.00
Net Operating Income	$1,72,000.00

From above segmented income statement, Segment margin of North Business Segment = $198,000