Vulcan Company\'s contribution format income statement for June is given below:

Question

Vulcan Company's contribution format income statement for June is given below:

396,858

436,372

$25,770

     Management is disappointed with the company's performance and is wondering what can be done to improve profits. By examining sales and cost records, you have determined the following:

The company is divided into two sales territories%u2014Northern and Southern. The Northern territory recorded $411,000 in sales and $209,850 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern territory. Fixed expenses of $150,000 and $120,000 are traceable to the Northern and Southern territories, respectively. The rest of the fixed expenses are common to the two territories.

The company is the exclusive distributor for two products%u2014Paks and Tibs. Sales of Paks and Tibs totaled $105,000 and $306,000, respectively, in the Northern territory during June. Variable expenses are 25% of the selling price for Paks and 60% for Tibs. Cost records show that $57,000 of the Northern territory's fixed expenses are traceable to Paks and $50,000 to Tibs, with the remainder common to the two products.

Problem 11-24 Requirement 1

Prepare contribution format segmented income statements. (Round percentage computations to 1 decimal place. Negative amounts other than expenses should be indicated by a minus sign. Omit the "$" and "%" signs in your response.)

   

   

   

   

   

   

   

   

   

$

   

$

   

$

   

   

   

   

   

   

   

$

   

$

   

$

   

Problem 11-24 Requirement 2

Based on the above income statements, which of the following the statement(s) is true? (Select all that apply.)

Vulcan Company
Income Statement
For the Month Ended June 30   Sales $859,000   Variable expenses

396,858

  Contribution margin 462,142   Fixed expenses

436,372

  Net operating income

$25,770

Explanation / Answer

Northern Southern Total Sales 411000 448000 859000 Variable expenses 209850 187008 396858 Cont. 201150 260992 462142 Traceable, Fixed Exp. 150000 120000 270000 Other Fixed 0 0 166372 Income 51150 140992 25770 Paks Tibs Northern Sales 105000 306000 411000 Variable expenses 26250 183600 209850 Cont. 78750 122400 201150 Traceable, Fixed Exp. 57000 50000 107000 Other Fixed 0 0 43000 Income 21750 72400 51150

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