A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:

A) ($7,000)
B) $172,000
C) $351,000
D) $496,000

Question

A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:A) ($7,000)B) $172,000C) $351,000D) $496,000

Chafic Talje · Accepted Answer

Final Answer : B, Explanation :  A segmented income statement in contribution format separates the costs into fixed and variable, and then calculates the contribution margin for each segment. The sum of all contribution margins gives the total contribution margin of the company as a whole. Subtracting the total fixed costs from the total contribution margin gives the net operating income of the company as a whole. Therefore, if the segmented income statement shows a total contribution margin of $172,000 after deducting all variable costs, and the total fixed costs are less than $172,000, then the net operating income would be positive. Option B is the only choice that meets this criteria.   Reference: CHO7-Ref41Tubaugh Corporation has two major business segments--East and West.In December, the East business segment had sales revenues of $690,000, variable expenses of $352,000, and traceable fixed expenses of $104,000.During the same month, the West business segment had sales revenues of $140,000, variable expenses of $56,000, and traceable fixed expenses of $24,000.The common fixed expenses totaled $162,000 and were allocated as follows: $89,000 to the East business segment and $73,000 to the West 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:

A) ($7,000)
B) $172,000
C) $351,000
D) $496,000

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Related questions

A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:A) ($7,000) B) $172,000C) $351,000D) $496,000

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Learning Objectives

Learning Objectives

Related questions

A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:

A) ($7,000)
B) $172,000
C) $351,000
D) $496,000