Vulcan Company's contribution format Income statement for June is as follows: Vulcan Company Income Statement For the Month Ended June 30 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 900,000 400,000 500,000 450,000 $ 50,000 Management wants to improve profits and gathered the following data: a. The company is divided into two sales territories-Northern and Southern. The Northern Territory recorded $400,000 in sales and $180,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $160,000 and $150,000 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 $150,000 and $250,000, respectively. In the Northern territory during June. Variable expenses are 30% of the selling price for Paks and 54% for Tibs. Cost records show $75,000 of the Northern Territory's fixed expenses are traceable to Paks and $57,500 to Tibs, with the remainder common to the two products. Required: 1-a. Prepare contribution format Income statements for the total company segmented by sales territories.
Vulcan Company's contribution format Income statement for June is as follows: Vulcan Company Income Statement For the Month Ended June 30 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 900,000 400,000 500,000 450,000 $ 50,000 Management wants to improve profits and gathered the following data: a. The company is divided into two sales territories-Northern and Southern. The Northern Territory recorded $400,000 in sales and $180,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $160,000 and $150,000 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 $150,000 and $250,000, respectively. In the Northern territory during June. Variable expenses are 30% of the selling price for Paks and 54% for Tibs. Cost records show $75,000 of the Northern Territory's fixed expenses are traceable to Paks and $57,500 to Tibs, with the remainder common to the two products. Required: 1-a. Prepare contribution format Income statements for the total company segmented by sales territories.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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hsl.7
Transcribed Image Text:Vulcan Company's contribution format Income statement for June is as follows:
Vulcan Company
Income Statement
For the Month Ended June 30
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
$ 900,000
400,000
500,000
450,000
$ 50,000
Management wants to improve profits and gathered the following data:
a. The company is divided into two sales territories-Northern and Southern. The Northern Territory recorded $400,000 in sales and
$180,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory.
Fixed expenses of $160,000 and $150,000 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 $150,000 and $250,000,
respectively. In the Northern territory during June. Variable expenses are 30% of the selling price for Paks and 54% for Tibs. Cost
records show $75,000 of the Northern Territory's fixed expenses are traceable to Paks and $57,500 to Tibs, with the remainder
common to the two products.
Required:
1-a. Prepare contribution format income statements for the total company segmented by sales territories.
1-b. Prepare contribution format Income statements for the Northern Territory segmented by product line.
Complete this question by entering your answers in the tabs below.
Required 1A Required 18
Prepare contribution format income statements for the total company segmented by sales territories.
Note: Round the percentage answers to one decimal place (i.e .1234 should be entered as 12.3).
Sales
Variable expenses
Gross margin
Traceable fixed expenses
Territorial segment margin
Common fixed expenses
Net operating income
Sales Territory
Total Company
Northern
Southern
Amount
%
$ 900,000
Amount
$ 400,000
%
Amount
$ 500,000
400,000
500,000
400,000
500,000
500,000
$ 400,000
$ 500,000
$ 500,000
<Required 1A
Required 1B >
%
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