Segmented Income Statement
Bovine Company, a wholesale distributor of DVDs. has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement below:
Sales | $1,500,000 |
Variable expenses | 588,000 |
Contribution margin | 912,000 |
Fixed expenses | 945,000 |
Net operating loss | $ (33,000) |
In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly the Accounting Department has developed the following data:
| Geographic Market | ||
| South | Central | North |
Sales | $400,000 | $600,000 | $500,000 |
Variable expenses as a percentage of sales | 52% | 30% | 40% |
Traceable fixed expenses | $240,000 | $ 330,000 | $200,000 |
Required:
1. Prepare a contribution form at income statement segmented by geographic market. as desired by the president.
2. The company’s sale- manager believes that sales in the Central geographic market could be increased by 15% if monthly advertising were increased by $25,000.Would you recommend the increased advertising? Show computations to support your answer.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.