Bovine Company, a wholesale distributor of DVDs, has been experiencing losses fo

Question

Bovine Company, a wholesale distributor of DVDs, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement below: Sales Variable expenses $1,654,000 673,360 Contribution margin Fixed expenses 980,640 1,079,000 Net operating loss $ (98,360) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following data Geographic Market Central $444,000 $650,000 $560,000 South North Sales Variable expenses as a percentage of sales Traceable fixed expenses 54% 40% 31% $264,000 $329,000 $200,000 Required 1. Prepare a contribution format income statement segmented by geographic market, as desired by the

Explanation / Answer

Contribution Format Income Statement

2b) No

South Central North Total Sales 444000 650000 560000 1654000 less variable Cost 239760 260000 173600 673360 contribution margin 204240 390000 386400 980640 less traceable fixed cost 264000 329000 200000 793000 Segment MArgin (59760) 61000 186400 187640 less Common Fixed COst 286000 Operating Income (98360)

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