Sales Variable expenses $ 750,000 336,000 Contribution margin Fixed expenses 414

Question

Sales Variable expenses $ 750,000 336,000 Contribution margin Fixed expenses 414,000 378,000 Net operating income s36,000 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: a. The company is divided into two sales territories-Northern and Southen. The Northern territory recorded $300,000 in sales and $156,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern territory. Fixed expenses of $120,000 and $108,000 are traceable to the Northern and Southern territories, respectively. The rest of the fixed expenses are common to the two territories b. The company is the exclusive distributor for two products Paks and Tibs. Sales of Paks and Tibs totaled $50,000 and $250,000, respectively, in the Northern territory during June. Variable expenses are 22% of the selling price for Paks and 58% for Tibs. Cost records show that $30,000 of the Northern territory's fixed expenses are traceable to Paks and $40,000 to Tibs, with the remainder common to the two products. Required: 1-a. Prepare contribution format segmented income statements for the total company broken down between sales territories. (Round the percentage answers to one decimal place (i.e .1234 should be entered as 12.3)) Sales Territory Total Company Northern Southern %-li Amount lm %. Amount--% nt 750,000 336,000 414,000 160.0$ 300.000 156,000 144.000 120,000 100 100 Sales Variable expenses Contribution margin Traceable fixed expensesilll1378,000 100.0 100 100 36,000 100.0 S24,000 100 $ 100 Territorial segment margin Common fixed expenses Net operating income 36.000 100.0

Explanation / Answer

1-a   

Total Company (In $) Sales territory(In $)

Items Northern Southern

Amount % Amount % Amount %   

sales 750000 100 300000 100 450000 100

V.C 336000 44.8 156000 52 180000 40

Contr. 414000 55.2 144000 48 270000 60

FC 228000 30.4 120000 40 108000 24

Margin 186000 24.8 24000 8 162000 36

CFC 150000 20

NOI 36000 4.8

Note:   VC - Variable Cost

   Contr. - Contribution

   FC- Fixed Cost

Margin- Territorial margin

   CFC- common fixed cost , CFC = 378000 - 120000- 108000 = 150000

NOI- Net Operating Income

Percentage Calculation = Items / sales * 100

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.