Bill Jones Flooring's accountant, has prepared the following income statement for the month of May. In preparing the income statement, Bill was unsure what to do with $240,000 in corporate fixed expenses that cannot be traced to a division.Since these costs were incurred to run the business, and he believed that each division benefited equally, he just allocated half to each division.
Required:
a.How do you think Bill should have handled the $240,000 in corporate fixed expenses?
b.Prepare a segment margin income statement that highlights each division's contribution to corporate profits.Omit the heading.

Question

Bill Jones Flooring's accountant, has prepared the following income statement for the month of May.  In preparing the income statement, Bill was unsure what to do with $240,000 in corporate fixed expenses that cannot be traced to a division.Since these costs were incurred to run the business, and he believed that each division benefited equally, he just allocated half to each division.
Required: 
a.How do you think Bill should have handled the $240,000 in corporate fixed expenses?
b.Prepare a segment margin income statement that highlights each division's contribution to corporate profits.Omit the heading.

Quizplus · Accepted Answer

The Answer of Bill Jones Flooring's accountant, has prepared the following income statement for the month of May.  In preparing the income statement, Bill was unsure what to do with $240,000 in corporate fixed expenses that cannot be traced to a division.Since these costs were incurred to run the business, and he believed that each division benefited equally, he just allocated half to each division.
Required: 
a.How do you think Bill should have handled the $240,000 in corporate fixed expenses?
b.Prepare a segment margin income statement that highlights each division's contribution to corporate profits.Omit the heading.

Bill Jones Flooring's Accountant, Has Prepared the Following Income Statement