The following data pertain to the operating revenues and expenses for California, Inc. for 20XX.
Los Angeles
(LA) Segment
San Francisco
(SF) Segment
Total
Sales $180,000 $360,000 $540,000
Variable expenses 96,000 240,000 336,000
Direct fixed expenses 24,000 30,000 54,000
Indirect fixed expenses 72,000
Assets (investment) used to generate operating income for the two segments are shown below.
Los Angeles
Segment
San Francisco
Segment
Assets directly used by and identified with the segment $180,000 $360,000
Prepare a segmented income statement in good format showing the contribution margin of each segment, the contribution to indirect expenses of each segment, and the total income of California, Inc.
Determine the return on investment for evaluating (1) the earning power of the entire company and (2) the performance of each segment.
Comment on the results of part (b).
