Bovine Company, a wholesale distributor of DVDs, has been by its most recent mon

Question

Bovine Company, a wholesale distributor of DVDs, has been by its most recent monthly contribution format income statement below: experiencing losses for some time, as shown 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 president. (Input all amounts as positive values except losses which should be indicated by a minus sign.) raphic Market Total South North

Explanation / Answer

Solution:

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Yes, it is recommended to increase advertising.

Geographic Market Total Company South Central North Sales 1,654,000 444,000 650,000 560,000 Variable Expenses 673,360 239760 260000 173600 Contribtution margin 980,640 204,240 390,000 386,400 Traceable fixed expenses 793,000 264,000 329,000 200,000 Geographic market segment margin 187,640 -59,760 61,000 186,400 Common Fixed Cost $ 1,079,000 - $ 739,000 286,000 Net Operating Loss -98,360

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