Brabant NV of the Netherlands is a wholesale distributor of Dutch cheeses that i
ID: 2487591 • Letter: B
Question
Brabant NV of the Netherlands is a wholesale distributor of Dutch cheeses that it sells throughout the European Community. Unfortunately, the company’s profits have been declining, which has caused considerable concern. To help understand the condition of the company, the managing director of the company has requested that the monthly income statement be segmented by sales territory. Accordingly, the company’s accounting department has prepared the following statement for March, the most recent month. (The Dutch currency is the euro which is designated by €.)
Sales Territory
Cost of goods sold and shipping expenses are both variable; other costs are all fixed. Brabant NV purchases cheeses at auction and from farmers’ cooperatives, and it distributes them in the three territories listed above. Each of the three sales territories has its own manager and sales staff. The cheeses vary widely in profitability; some have a high margin and some have a low margin. (Certain cheeses, after having been aged for long periods, are the most expensive and carry the highest margins.)
Prepare a new segmented contribution format income statement for March. Show a Total column as well as data for each territory. In addition, for the company as a whole and for each sales territory, show each item on the segmented income statement as a percent of sales. (Note: % columns may not total due to rounding.) (Input all amounts as positive values except losses and their percentages which should be indicated by a minus sign. Round your percentage answers to 1 decimal place.)
Total
Southern Europe
Middle Europe
Northern Europe
Brabant NV of the Netherlands is a wholesale distributor of Dutch cheeses that it sells throughout the European Community. Unfortunately, the company’s profits have been declining, which has caused considerable concern. To help understand the condition of the company, the managing director of the company has requested that the monthly income statement be segmented by sales territory. Accordingly, the company’s accounting department has prepared the following statement for March, the most recent month. (The Dutch currency is the euro which is designated by €.)
Explanation / Answer
Brabant NV Segmented Contribution format Income Statement for the period ending March Sales Territory Total % of Sales Details Southern Europe % of Sales Middle Europe % of Sales Northern Europe % of Sales Sales Revenue 314,000 100.00% 798,000 100.00% 703,000 100.00% 1,815,000 100.00% Less Variable costs: - Cost of Goods Sold 91,000 28.98% 238,000 29.82% 315,000 44.81% 644,000 35.48% Shipping Cost 18,000 5.73% 30,000 3.76% 43,000 6.12% 91,000 5.01% Total Variable costs 109,000 34.71% 268,000 33.58% 358,000 50.92% 735,000 40.50% Contribution Margin 205,000 65.29% 530,000 66.42% 345,000 49.08% 1,080,000 59.50% Less Traceable Fixed costs - Salaries 52,000 16.56% 52,000 6.52% 113,000 16.07% 217,000 11.96% Insurance 9,400 2.99% 15,900 1.99% 14,000 1.99% 39,300 2.17% Advertsing 105,000 33.44% 238,000 29.82% 243,000 34.57% 586,000 32.29% Depreciation 24,000 7.64% 30,000 3.76% 28,000 3.98% 82,000 4.52% Total Traceable Fixed Expenses 190,400 60.64% 335,900 42.09% 398,000 56.61% 924,300 50.93% - Territorial Segment Margin 14,600 4.65% 194,100 24.32% (53,000) -7.54% 155,700 8.58% - Less Common Corporate Fixed Expenses - Advertisisng (general) 14,000 4.46% 38,000 4.76% 36,000 5.12% 88,000 4.85% General Adminitrative 21,000 6.69% 21,000 2.63% 21,000 2.99% 63,000 3.47% Total Common Corporate Expenses 35,000 11.15% 59,000 7.39% 57,000 8.11% 151,000 8.32% - Net Opertaing Income/(Loss) (20,400) -6.50% 135,100 16.93% (110,000) -15.65% 4,700 0.26% -
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.