Problem
Shannon Company segments its income statement into its North and South Divisions. The company's overall sales, contribution margin ratio, and net operating income are $400,000, 60%, and $40,000, respectively. The North Division's contribution margin and contribution margin ratio are $105,000 and 75%, respectively. The South Division's segment margin is $30,000. The company has $48,000 of common fixed expenses that cannot be traced to either division.
Required:
Prepare an income statement for Shannon Company that uses the contribution format and is segmented by divisions.