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 $ 850,000 308,000 542,000 490,000 $ 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 Southern 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 Tibs. Cost records show that $86,400 of the Northern Territory's fixed expenses are traceable to Paks and $46,200 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.
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 $ 850,000 308,000 542,000 490,000 $ 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 Southern 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 Tibs. Cost records show that $86,400 of the Northern Territory's fixed expenses are traceable to Paks and $46,200 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
$ 850,000
308,000
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:
542,000
490,000
$ 52,000
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 Southern 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 Tibs. Cost
records show that $86,400 of the Northern Territory's fixed expenses are traceable to Paks and $46,200 to Tibs, with the remainder
common to the two products.
Req 1A
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.
Complete this question by entering your answers in the tabs below.
Reg 1B
Prepare contribution format segmented income statements for the total company broken down between sales territories. (Round the
percentage answers to one decimal place (1.e.1234 should be entered as 12.3).)
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