products. Required: i. Prepare contribution format segmented income statements first showing the total company broken down between sales territories and then showing the Northern territory broken down by product line. In addition, for the company as a whole and for each segment, show each item on the segmented income statements as a percent of sales. ii. Look at the statement you have prepared showing the total company segmented by sales territory. What insights revealed by this statement should be brought to the attention of management? iii. Look at the statement you have prepared showing the Northern territory segmented by product lines. What insights revealed by this statement should be brought to the attention of management?
products. Required: i. Prepare contribution format segmented income statements first showing the total company broken down between sales territories and then showing the Northern territory broken down by product line. In addition, for the company as a whole and for each segment, show each item on the segmented income statements as a percent of sales. ii. Look at the statement you have prepared showing the total company segmented by sales territory. What insights revealed by this statement should be brought to the attention of management? iii. Look at the statement you have prepared showing the Northern territory segmented by product lines. What insights revealed by this statement should be brought to the attention of management?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:products.
Required:
Prepare contribution format segmented income statements first showing the total
company broken down between sales territories and then showing the Northern
territory broken down by product line. In addition, for the company as a whole and
for each segment, show each item on the segmented income statements as a percent
of sales.
ii. Look at the statement you have prepared showing the total company segmented by
sales territory. What insights revealed by this statement should be brought to the
attention of management?
iii. Look at the statement you have prepared showing the Northern territory segmented
by product lines. What insights revealed by this statement should be brought to the
attention of management?
Transcribed Image Text:(c)
Vulcan Company's contribution format income statement for June is given below:
Vulcan Company
Income Statement
For the Month Ended June 30
Sales
Tk.
750,000
Variable Expenses
Contribution Margin
Fixed Expenses
336,000
414,000
378,000
$36,000
Net Operating Income
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:
The company is divided into two sales territories-Northern and Southern. The
Northern territory recorded Tk. 300,000 in sales and Tk. 156,000 in variable expenses
during June; the remaining sales and variable expenses were recorded in the Southern
territory. Fixed expenses of Tk. 120,000 and Tk. 108,000 are traceable to the Northern
and Southern territories, respectively. The rest of the fixed expenses are common to the
two territories.
а.
b.
The company is the exclusive distributor for two products-Paks and Tibs. Sales of
Paks and Tibs totalled Tk. 50,000 and Tk. 250,000, respectively, in the Northern
territory during June. Variable expenses are 22% of the selling price for Paks and 58%
for Tibs. Cost records show that Tk. 30,000 of the Northern territory's fixed expenses
are traceable to Paks and tk. 40,000 to Tibs, with the remainder common to the two
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