Vulcan Company's contribution format income statement for June is as follows: Vulcan Company Income Statement For the Month Ended June 30 Sales $ 900,000 Variable expenses Contribution margin Fixed expenses Net operating income 400,000 500,000 470,000 $ 30,000 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 $200,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $172,000 and $135,000 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 $200,000 and $200,000, respectively, in the Northern territory during June. Variable expenses are 26% of the selling price for Paks and 74% for Tibs. Cost records show $94,000 of the Northern Territory's fixed expenses are traceable to Paks and $42,000 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.
Vulcan Company's contribution format income statement for June is as follows: Vulcan Company Income Statement For the Month Ended June 30 Sales $ 900,000 Variable expenses Contribution margin Fixed expenses Net operating income 400,000 500,000 470,000 $ 30,000 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 $200,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $172,000 and $135,000 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 $200,000 and $200,000, respectively, in the Northern territory during June. Variable expenses are 26% of the selling price for Paks and 74% for Tibs. Cost records show $94,000 of the Northern Territory's fixed expenses are traceable to Paks and $42,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Vinubhai
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
$ 900,000
Variable expenses
Contribution margin
Fixed expenses
Net operating income
400,000
500,000
470,000
$ 30,000
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 $200,000 in variable expenses during June; the remaining sales and variable expenses
were recorded in the Southern Territory. Fixed expenses of $172,000 and $135,000 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
$200,000 and $200,000, respectively, in the Northern territory during June. Variable expenses are 26% of the
selling price for Paks and 74% for Tibs. Cost records show $94,000 of the Northern Territory's fixed expenses are
traceable to Paks and $42,000 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.
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