Address the question in the picture. Brabant NV of the Netherlands is a wholesale distributor of Dutch cheeses that it sells throughout the EuropeanCommunity. Unfortunately, the company's profits have been declining, which has caused considerable concern. To helpunderstand the condition of the company. the managing director of the company has requested that the monthly incomestatement be segmented by sales territory. Accordingly, the company's accounting department has prepared the followingstatement for March, the most recent month. (The Dutch currency is the euro which is designated by €.)Sales TerritorySouthern Middle NorthernEuropeEuropeEuropeSales€300,000 €800,000 €700,00Territorial expenses (traceable):Cost of goods sold93,000 240,000 315,000Salaries54,000 56,000 112,000Insurance9,00016,00014,000Advertising105,000 240,000 245,000Depreciation21,00032,00028,000Shipping15,00032,00042,000Total territorial expenses297,000 616,000 756,000Territorial income (loss)3,000 184,000 (56,000)before corporate expensesCorporate expenses: Corporate expenses:Advertising (general)15,000 400,000|35,000General administrative20,00020,00020,000Total corporate expenses35,00060,00055,000Net operating income (loss)€(32,000) €124,0oo€(111,000)Cost of goods sold and shipping expenses are both variable: other costs are all fixed. Brabant NV purchases cheeses atauction and from farmers' cooperatives, and it distributes them in the three territories listed above. Each of the three salesterritories has its own manager and sales stuff. The cheeses vary widely in profitability: some have a high margin andsome have a low margin. (Certain cheeses. after having been aged for long periods. are the most expensive and carry thehighest margins.)Required:1. List any disadvantages or weaknesses that you see to the statement format illustrated above.2. Explain the basis that is apparently being used to allocate the corporate expenses to the territories. Do you agree withthese al locations? Explain.3. Prepare a new segmented contribution format income statement for May. Showa Total column as well as data for eachterritory. In addition for the company as a whole and for each sales territory. show each item on the segmented incomestatement as a percent of sales.4. Analyze the statement that you prepared in (3) above. What points that might help to improve the company'sperformance would you bring to management's attention?

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Brabant NV of the Netherlands is a wholesale distributor of Dutch cheeses that it sells throughout the European Community. Unfortunately, the company's profits have been declining, which has caused considerable concern. To help understand the condition of the company. the managing director of the company has requested that the monthly income statement be segmented by sales territory. Accordingly, the company's accounting department has prepared the following statement for March, the most recent month. (The Dutch currency is the euro which is designated by €.) Sales Territory Southern Middle Northern Europe Europe Europe Sales €300,000 €800,000 €700,00 Territorial expenses (traceable): Cost of goods sold 93,000 240,000 315,000 Salaries 54,000 56,000 112,000 Insurance 9,000 16,000 14,000 Advertising Depreciation Shipping 105,000 240,000 245,000 21,000 32,000| 28,000 15,000 32,000| 42,000 297,000 616,000 756,000 Total territorial expenses Territorial income (loss) 3,000 184,000 (56,000) before corporate expenses

Brabant NV of the Netherlands is a wholesale distributor of Dutch cheeses that it sells throughout the European Community. Unfortunately, the company's profits have been declining, which has caused considerable concern. To help understand the condition of the company. the managing director of the company has requested that the monthly income statement be segmented by sales territory. Accordingly, the company's accounting department has prepared the following statement for March, the most recent month. (The Dutch currency is the euro which is designated by €.) Sales Territory Southern Middle Northern Europe Europe Europe Sales €300,000 €800,000 €700,00 Territorial expenses (traceable): Cost of goods sold 93,000 240,000 315,000 Salaries 54,000 56,000 112,000 Insurance 9,000 16,000 14,000 Advertising Depreciation Shipping 105,000 240,000 245,000 21,000 32,000| 28,000 15,000 32,000| 42,000 297,000 616,000 756,000 Total territorial expenses Territorial income (loss) 3,000 184,000 (56,000) before corporate expenses

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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