Script, Inc., has two product lines. The September income statements of each pro

Question

Script, Inc., has two product lines. The September income statements of each product line and the company are as follows: SCRIPT, INC. Product Line and Company Income Statements For Month of September Pens Pencils Total Sales $ 30,000 $ 30,000 $ 60,000 Less variable expenses (12,000) (12,000) (24,000) Contribution margin 18,000 18,000 36,000 Less direct fixed expenses (9,000) (7,000) (16,000) Product margin $ 9,000 $ 11,000 20,000 Less common fixed expenses (6,000) Net income $ 14,000 Pens and pencils are sold in two territories, Florida and Alabama, as follows: Florida Alabama Pen sales $ 18,000 $ 12,000 Pencil sales 9,000 21,000 Total sales $ 27,000 $ 33,000 The common fixed expenses are traceable to each territory as follows: Florida fixed expenses $ 2,000 Alabama fixed expenses 3,000 Home office administration fixed expenses 1,000 Total common fixed expenses $ 6,000 The direct fixed expenses of pens, $9,000, and of pencils, $7,000, cannot be identified with either territory. The company's accountants were unable to allocate any of the common fixed expenses to the various segments. Prepare income statements segmented by territory for September, including a column for the entire firm. Do not use negative signs with your answers. Script, Inc. Territory and Company Income Statements For the Month of September Florida Alabama Company Totals Sales: Pens $ Answer $ Answer $ Answer Pencils Answer Answer Answer Total sales Answer Answer Answer Variable costs: Pens Answer Answer Answer Pencils Answer Answer Answer Total Answer Answer Answer Contribution margin Answer Answer Answer Direct fixed expenses Answer Answer Answer Territory margin $ Answer $ Answer Answer Common fixed expenses: Pens Answer Pencils Answer Home office Answer Total Answer Net income $ Answer

Explanation / Answer

Product wise Income Statement Pens % Pencils % Total Sales        30,000 100%      30,000 100%        60,000 Less Variable expenses        12,000 40%      12,000 40%        24,000 Contribution        18,000 60%      18,000 60%        36,000 Less Direct fixed expenses           9,000         7,000        16,000 Product Margin           9,000 30%      11,000 37%        20,000 Less Common fixed expenses 6000           6,000 Net Income 14000        14,000 Territories Income Statement Florida Alabama Pen Pencils Pen Pencils Sales        18,000         9,000      12,000      21,000 Less Variable expenses (40%)           7,200         3,600         4,800         8,400 Contribution        25,200      12,600      16,800      29,400 Less Direct fixed expenses           5,400         2,100         3,600         4,900 Product Margin        19,800      10,500      13,200      24,500 Less Common fixed expenses                                2,000                              3,000 Net Income                              28,300                            34,700

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