Problem 7-21 (Algo) Segment Reporting and Decision-Making [LO7-4] 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 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: 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 $208,000 and $125,000 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 $120,000 and $280,000, respectively, in the Northern territory during June. Variable expenses are 24% of the selling price for Paks and 54% for Tibs. Cost records show that $52,800 of the Northern Territory's fixed expenses are traceable to Paks and $53,200 to Tibs, with the remainder common to the two products. Required: I-a. Prepare contribution format segmented income statements for the total company broken down between sales territories. I-b. Prepare contribution format segmented income statements for the Northern Territory broken down by product line. Complete this question by entering your answers in the tabs below. Sales Variable expenses $ 900,000 400,000 Req 14 Req 10 Prepare contribution format segmented income statements for the total company broken down between sales territories. (Round the percentage answers to one decimal place (i.e.1234 should be entered as 12.3).) Contribution margin Traceable fixed expenses Territorial segment margin Comman fixed expenses Net operating income 500,000 460,000 $ 40,000 Amount Total Company $ 900,000 400,000 500,000 500,000 $ 500,000 55.6 55.6 55.6 55.6 Northern Amount S 0 0 Sales Territory % 0.0 Southern Amount 0.0 S 0 0 0.0 0.0

Problem 7-21 (Algo) Segment Reporting and Decision-Making [LO7-4] 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 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: 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 $208,000 and $125,000 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 $120,000 and $280,000, respectively, in the Northern territory during June. Variable expenses are 24% of the selling price for Paks and 54% for Tibs. Cost records show that $52,800 of the Northern Territory's fixed expenses are traceable to Paks and $53,200 to Tibs, with the remainder common to the two products. Required: I-a. Prepare contribution format segmented income statements for the total company broken down between sales territories. I-b. Prepare contribution format segmented income statements for the Northern Territory broken down by product line. Complete this question by entering your answers in the tabs below. Sales Variable expenses $ 900,000 400,000 Req 14 Req 10 Prepare contribution format segmented income statements for the total company broken down between sales territories. (Round the percentage answers to one decimal place (i.e.1234 should be entered as 12.3).) Contribution margin Traceable fixed expenses Territorial segment margin Comman fixed expenses Net operating income 500,000 460,000 $ 40,000 Amount Total Company $ 900,000 400,000 500,000 500,000 $ 500,000 55.6 55.6 55.6 55.6 Northern Amount S 0 0 Sales Territory % 0.0 Southern Amount 0.0 S 0 0 0.0 0.0

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

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 42E: Sales Revenue Approach, Variable Cost Ratio, Contribution Margin Ratio Arberg Companys controller...

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