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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 $ 750,000 336,000 414,000 378,000 $ 36,000 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 $300,000 in sales and $156,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern territory. Fixed expenses of $120,000 and $108,000 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 $50,000 and $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 $30,000 of the Northern territory's fixed expenses are traceable to Paks and $40,000 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 Variable expenses Contribution margin Fixed expenses Net operating income $ 750,000 336,000 414,000 378,000 $ 36,000 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 $300,000 in sales and $156,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern territory. Fixed expenses of $120,000 and $108,000 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 $50,000 and $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 $30,000 of the Northern territory's fixed expenses are traceable to Paks and $40,000 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.

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter2: Basic Managerial Accounting Concepts
Section: Chapter Questions
Problem 26BEA
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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 $ 750,000 336,000 414,000 378,000 $ 36,000 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 $300,000 in sales and $156,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern territory. Fixed expenses of $120,000 and $108,000 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 $50,000 and $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 $30,000 of the Northern territory's fixed expenses are traceable to Paks and $40,000 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. Complete this question by entering your answers in the tabs below. Required 1A Required 1B Prepare contribution format income statements for the Northern Territory segmented by product line. Note: Round the percentage answers to one decimal place (i.e .1234 should be entered as 12.3). Product Line Amount Northern Territory % Paks Tibs Amount % Amount % Sales $ 300,000 100.0 $ 50,000 Variable expenses 156,000 11,000 Contribution margin Traceable fixed expenses 144,000 100.0 39,000 0.0 $ 250,000 145,000 105,000 0.0 70,000 30,000 40,000 Product line segment margin 74,000 100.0 $ 9,000 0.0 $ 65,000 0.0 Common fixed expenses 50,000 Sales territory segment margin $ 24,000 100.0
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 $ 750,000 336,000 414,000 378,000 $ 36,000 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 $300,000 in sales and $156,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern territory. Fixed expenses of $120,000 and $108,000 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 $50,000 and $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 $30,000 of the Northern territory's fixed expenses are traceable to Paks and $40,000 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. Complete this question by entering your answers in the tabs below. Required 1A Required 1B Prepare contribution format income statements for the Northern Territory segmented by product line. Note: Round the percentage answers to one decimal place (i.e .1234 should be entered as 12.3). Product Line Amount Northern Territory % Paks Tibs Amount % Amount % Sales $ 300,000 100.0 $ 50,000 Variable expenses 156,000 11,000 Contribution margin Traceable fixed expenses 144,000 100.0 39,000 0.0 $ 250,000 145,000 105,000 0.0 70,000 30,000 40,000 Product line segment margin 74,000 100.0 $ 9,000 0.0 $ 65,000 0.0 Common fixed expenses 50,000 Sales territory segment margin $ 24,000 100.0
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