Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Operating loss $2,160,000 874,900 1,285,100 1,337,000 $ (51,900) 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: Geographic Market Sales Variable expenses as a percentage of sales Traceable fixed expenses South $616,000 $336,000 55% Central $815,000 $546,000 30% North $729,000 $316,000 40%
Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Operating loss $2,160,000 874,900 1,285,100 1,337,000 $ (51,900) 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: Geographic Market Sales Variable expenses as a percentage of sales Traceable fixed expenses South $616,000 $336,000 55% Central $815,000 $546,000 30% North $729,000 $316,000 40%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![1. Prepare a contribution format income statement segmented by geographic market, as requested by the
president.
Incremental net operating income
Total
Company
2-b. Would you recommend the increased advertising?
No
Yes
South
Geographic Market
2-a. The company's sales manager believes that sales in the Central geographic market could be
increased by 10% if monthly advertising is increased by $41,000. Calculate the incremental net
operating income.
Central
North](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F492121c0-3843-4585-9c4f-58f7a1b7b43d%2Fab8d0cdb-46f3-48b5-90be-4d9383134f76%2Foo6pq9_processed.png&w=3840&q=75)
Transcribed Image Text:1. Prepare a contribution format income statement segmented by geographic market, as requested by the
president.
Incremental net operating income
Total
Company
2-b. Would you recommend the increased advertising?
No
Yes
South
Geographic Market
2-a. The company's sales manager believes that sales in the Central geographic market could be
increased by 10% if monthly advertising is increased by $41,000. Calculate the incremental net
operating income.
Central
North
![Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as
shown by its most recent monthly contribution format income statement:
Sales
Variable expenses
Contribution margin
Fixed expenses
Operating loss
$2,160,000
874,900
1,285,100
1,337,000
$ (51,900)
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:
Geographic Market
Sales
Variable expenses as a percentage of sales
Traceable fixed expenses
South
$616,000
$336,000
55%
Central
$815,000
$546,000
30%
North
$729,000
$316,000
40%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F492121c0-3843-4585-9c4f-58f7a1b7b43d%2Fab8d0cdb-46f3-48b5-90be-4d9383134f76%2F9ncthd9_processed.png&w=3840&q=75)
Transcribed Image Text:Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as
shown by its most recent monthly contribution format income statement:
Sales
Variable expenses
Contribution margin
Fixed expenses
Operating loss
$2,160,000
874,900
1,285,100
1,337,000
$ (51,900)
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:
Geographic Market
Sales
Variable expenses as a percentage of sales
Traceable fixed expenses
South
$616,000
$336,000
55%
Central
$815,000
$546,000
30%
North
$729,000
$316,000
40%
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