Tco D Data For December Concerning Dinnocenzo Corporations

1 Tco D Data For December Concerning Dinnocenzo Corporations Two Ma

Remove the instructions, grading criteria, due date, and meta-instruction lines. Keep only the core assignment question: Prepare a segmented income statement in the contribution format for Dinnocenzo Corporation based on the provided data, showing only dollar amounts, and omit percentages.

Paper For Above instruction

The task involves creating a segmented income statement in contribution margin format for Dinnocenzo Corporation, based on data for December concerning its two primary business segments: Fibers and Feedstocks. The data provided include sales revenues, variable expenses, traceable fixed expenses, and allocated common fixed expenses.

Given Data:

  • Sales revenues: Fibers = $870,000; Feedstocks = $820,000
  • Variable expenses: Fibers = $426,000; Feedstocks = $344,000
  • Traceable fixed expenses: Fibers = $148,000; Feedstocks = $156,000
  • Common fixed expenses: Total = $314,000; allocated as $129,000 to Fibers and $185,000 to Feedstocks

The goal is to compute the contribution margin for each segment by subtracting variable expenses from sales revenues. Then, determine segment profit by subtracting traceable fixed expenses from contribution margins. Afterward, allocate common fixed expenses to each segment and compute the overall net income for the company. The presentation should omit percentage calculations, showing only dollar amounts.

Paper For Above instruction

To evaluate the profitability of Dinnocenzo Corporation's two major operational segments—Fibers and Feedstocks—a segmented income statement prepared in contribution margin format provides a comprehensive analysis. This approach isolates the variable component of expenses and highlights the contribution each segment makes toward covering fixed expenses and generating net income.

The calculation begins with determining the contribution margin (sales revenue minus variable expenses) for each segment. For Fibers, the sales revenue of $870,000 minus variable expenses of $426,000 results in a contribution margin of $444,000. For Feedstocks, subtracting $344,000 from $820,000 yields a contribution margin of $476,000.

Next, deduct the traceable fixed expenses to arrive at segment profitability. The Fibers segment has traceable fixed expenses of $148,000, leading to a segment profit of $296,000 ($444,000 - $148,000). The Feedstocks segment, with traceable fixed expenses of $156,000, results in a segment profit of $320,000 ($476,000 - $156,000).

Subsequently, allocate the common fixed expenses of $314,000 across both segments. The allocation is based on the proportion of each segment's contribution margin relative to total contribution margin. The total contribution margin across segments sums to $920,000 ($444,000 + $476,000). The proportionate allocations are approximately $129,000 to Fibers and $185,000 to Feedstocks, aligning with the provided allocation figures.

Finally, subtract these allocated common fixed expenses from each segment's profit to determine the segment's net income. For Fibers: $296,000 - $129,000 = $167,000. For Feedstocks: $320,000 - $185,000 = $135,000. The overall net income for the company, derived by summing the net incomes of both segments, totals $302,000.

This segmented income statement provides clear insights into each division's contribution and net profitability, enabling management to make informed strategic decisions. It emphasizes the importance of considering both segment-specific costs and the impact of shared fixed expenses in overall financial analysis.

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