Question

Vulcan Company's contribution format income statement for June is as follows: Vulcan Company Income Statement For the Month Ended June 30 Sales $ 300,000 Variable expenses Contribution margin Fixed expenses 455.000 $ Net operating income 32.0 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 Southem. The Northern Territory recorded $400,000 in sales and $248.000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $140,000 and $84,000 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 $110,000 and $290,000, respectively, in the Northern territory during June Variable expenses are 33% of the selling price for Paks and 73% for Tibs. Cost records show that $68.200 of the Northern Territory's fixed expenses are traceable to Paks and $60.900 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 1b. 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 1A Reg 18 Prepare contribution format segmented income statements for the total company broken down between sales territories (Round your percentage answers to 1 dedmal place le 0.1234 should be entered as 12. 30

Answer 1

Required: 1a Vulcan Company's Segment Income Statement For the Total Company For the month Ended June 30 Sales Territory Total Company Northern Southern Amount % Amount % Amount % Sales 800000 100.0 400000 100.0 400000 100.0 Less: Variable cost 3080001 38.51 248000 62.01 60000 15.01 Contribution 4920001 61.5 152000 38.0 340000 85.00 Traceable Fixed expenses 224000 28.0 140000 35.0 84000 Territory Segment margin 268000 33.5 12000 3.0 256000 64.0 Common fixed expenses 231000 28.9 Net operating Income 37000 4.6 21.01

Required: 1b Vulcan Company's Segment Income Statement For North Terriotry For the month Ended June 30 Product line Northern Territory Paks Tibs Amount Amount % Amount Sales 400000 100.0 110000 100.0 290000 Less: Variable cost 248000 62.01 36300 33.01 211700 Contribution 1520001 38.0 73700 67.0 78300 Traceable Fixed expenses 129100 32.3 68200 62.0 60900 Product line segment margin 229001 5.7 5500 5.0 17400 Common fixed expenses 10900 2.7 Sales territory segment margin 12000 % 100.00 73.0 27.01 21.01 6.0