Vulcan Company\'s contribution format income statement for June is given below V

Question

Vulcan Company's contribution format income statement for June is given below Vulcan Company Income Statement For the Month Ended June 30 Sales Variable expenses S 850,000 308,000 Contribution margin Fixed expenses 542,000 490,000 Net operating income S 52.000 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 Southern. The Northern Territory recorded $400,000 in sales and $200,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southem Territory. Fixed expenses of $152,000 and $126,000 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 $180,000 and $220,000, respectively, in the Northern territory during June. Variable expenses are 28% of the selling price for Paks and 68% for Tits Cost records show that S86.400 of the Northern Territory's fixed expenses are traceable to Paks and $46.200 to Tibs, with the remäinder common to the two products Required: 1a Prepare contribution format segmented income statements for the total company broken down between sales territories. (Round the percentage answers to one decimal place (ie 1234 should be entered as 12.3) Sales Territory Total Company Amount Northern Southern Amount Amount

Explanation / Answer

Sales Territory Total Company Northern Southern Amount % Amount % Amount %   Sales $850,000 100.0% 400000 100.0% $450,000 100.0%   Variable expenses $308,000 36.2% 200,000 50.0% 108,000 24.0%   Contribution margin $542,000 63.8% 200,000 50.0% 342,000 76.0%   Traceable fixed expenses $278,000 32.7% 152,000 38.0% 126,000 28.0%   Sales territory segment margin $264,000 31.1% $48,000 12.0% $216,000 48.0%   Common fixed expenses 212,000 24.9%   Net operating income $52,000 6.1% Product Line Northern Territory Paks Tibs Amount % Amount % Amount %   Sales $400,000 100.0% 180000 100.0% 220000 100.0%   Variable expenses $200,000 50.0% 50,400 28.0% 149,600 68.0%   Contribution margin $200,000 50.0% 129,600 72.0% 70,400 32.0%   Traceable fixed expenses $132,600 33.2% 86,400 48.0% 46,200 21.0%   Product line segment margin $67,400 16.9% $43,200 24.0% $24,200 11.0%   Common fixed expenses 19,400 4.9%   Sales territory segment margin $48,000 12.0%

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