Vulcan Company\'s contribution format income statement for June is as follows Vu

Question

Vulcan Company's contribution format income statement for June is as follows Vulcan Company Income Statement For the Month Ended June 30 Sales Variable expenses Contribution margin Fixed expenses Net operating income $900,000 400,000 500,000 450,000 $ 50,000 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 $180,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $200,000 and $115,000 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 $170,000 and $230,000, respectively, in the Northern territory during June. Variable expenses are 22% of the selling price for Paks and 62% for Tibs. Cost records show that $71,400 of the Northern Territory's fixed expenses are traceable to Paks and $50,600 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 1-b. Prepare contribution format segmented income statements for the Northern Territory broken down by product line

Explanation / Answer

1 Total Company Northern Southern Amount % Amount % Amount % Sales 900000 100.0% 400000 100.0% 500000 100.0% Variable expenses 400000 44.4% 180000 45.0% 220000 44.0% Contribution margin 500000 55.6% 220000 55.0% 280000 56.0% Traceable fixed expenses 315000 35.0% 200000 50.0% 115000 23.0% Territorial segment margin 185000 20.6% 20000 5.0% 165000 33.0% Common fixed expenses 135000 15.0% Net operating income 50000 5.6% 2 Northern Territory Paks Tibs Amount % Amount % Amount % Sales 400000 100.0% 170000 100.0% 230000 100.0% Variable expenses 180000 45.0% 37400 22.0% 142600 62.0% Contribution margin 220000 55.0% 132600 78.0% 87400 38.0% Traceable fixed expenses 68000 17.0% 17400 10.2% 50600 22.0% Product line segment margin 152000 38.0% 115200 67.8% 36800 16.0% Common fixed expenses 132000 33.0% Sales territory segment margin 20000 5.0%

Related Questions

Navigate

• Browse (All)
• Browse V
• Subjects

---

---

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