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Complete Question:
Ferrar Corporation has two major business segments: Consumer and Commercial. Data for the segments and for the company for March appear below: Sales revenues, Consumer $ 680,000 Sales revenues, Commercial $ 280,000 Variable expenses, Consumer $ 394,000 Variable expenses, Commercial $ 143,000 Traceable fixed expenses, Consumer $ 102,000 Traceable fixed expenses, Commercial $ 45,000 In addition, common fixed expenses totaled $210,000 and were allocated as follows: $122,000 to the Consumer business segment and $88,000 to the Commercial 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:
Answer:
Ferrar Corporation
A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:
= $66,000.
Explanation:
a) Data and Calculations:
Sales revenues, Consumer $ 680,000
Sales revenues, Commercial $ 280,000
Variable expenses, Consumer $ 394,000
Variable expenses, Commercial $ 143,000
Traceable fixed expenses, Consumer $ 102,000
Traceable fixed expenses, Commercial $ 45,000
In addition, common fixed expenses totaled $210,000 and were allocated as follows: $122,000 to the Consumer business segment and $88,000 to the Commercial business segment.
Segmented Income Statement for the month ended March 31
Consumer Commercial Total
Sales revenue $ 680,000 $ 280,000 $ 960,000
Variable expenses 394,000 143,000 537,000
Contribution margin $286,000 $137,000 $423,000
Traceable fixed expenses 102,000 45,000 147,000
Common fixed expenses 122,000 88,000 210,000
Total fixed expenses $224,000 $133,000 $357,000
Net income (loss) $62,000 $4,000 $66,000