Question

Data for March for Lazarus Corporation and its two major business segments, North and South, appear below: Sales revenues, North $380,000 Variable expenses, North $213,000 Traceable fixed expenses, North $65,000 Sales revenues, South $230,000 Variable expenses, South $104,000 Traceable fixed expenses, South $25,000 In addition, common fixed expenses totaled $156,000 and were allocated as follows: $84,000 to the North business segment and $72,000 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: Group of answer choices -$109,000 $203,000 $293,000 $47,000

Answer 1

Answer:

Lazarus 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:

= $47,000.

Explanation:

a) Data and Calculations:

                                       North        South            Total

Sales revenues          $380,000   $230,000   $610,000

Variable expenses       213,000       104,000      317,000

Contribution               $167,000    $126,000   $293,000

Fixed expenses:

  Traceable                   65,000       25,000        90,000

  Common                    84,000        72,000      156,000

  Total                       $149,000      $97,000   $246,000

Operating income      $18,000      $29,000     $47,000

b) Segmented income statement is prepared to show the contributions and operating income generated from different segments of the entity.  It helps to evaluate performances of segments and to identify profitable or less profitable segments.