Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 7, Problem 21P
Segment Reporting and Decision-Making L07—4
Vulcan Company’s contribution format income statement for June is as follows:
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 $300.000 in salesand $156,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southernterritory. Fixed expenses of $120,000 and $108,000 are traceable to the Northern and Southern territories, respectively. Therest 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 that $30,000 of the Northern territory’s fixed expenses are traceable to Paks and $40,000 toTibs, with the remainder common to the two products.
Required:
1. Prepare contribution format segmented income statements first showing the total company broken down between sales territories andthen showing the Northern territory broken down by product line. In addition, for the company as a whole and for each segment, showeach item on the segmented income statements as a percent of sales.
2. Look at the statement you have prepared showing the total company segmented by sales territory. What insights revealed by thisstatement should be mentioned to management?
3. Look at the statement you have prepared showing the Northern territory segmented by product lines. What insights revealed by thisstatement should be mentioned to management?
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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
३900, 000
400,000
500,000
475,000
$ 25,000
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:
a. The company is divided into two sales territories-Northern and Southern. The Northern Territory recorded $400,000 in sales and
$160,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory.
Fixed expenses of $176,000 and $140,000 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 $140,000 and…
ulcan 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
408,000
492,000
455,000
$ 37,000
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
$208,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory.
Fixed expenses of $164,000 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 $150,000 and…
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
$ 800,000
308,000
492,000
465,000
$ 27,000
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
$212,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory.
Fixed expenses of $140,000 and $92,000 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…
Chapter 7 Solutions
Introduction To Managerial Accounting
Ch. 7 - What is the difference between absorption costing...Ch. 7 - Are selling and administrative expenses treated as...Ch. 7 - Explain how fixed manufacturing overhead costs are...Ch. 7 - What are the arguments in favor of treating fixed...Ch. 7 - What are the arguments in favor of treating fixed...Ch. 7 - Prob. 6QCh. 7 - If the units produced exceed the units sold, which...Ch. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - How does Lean Production reduce or eliminate the...
Ch. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Distinguish between a traceable fixed cost and a...Ch. 7 - Explain how the contribution margin differs from...Ch. 7 - Why aren’t common fixed costs allocated to...Ch. 7 - How is it possible for a fixed cost that ¡s...Ch. 7 - Should a company allocate its common fixed costs...Ch. 7 - Prob. 1AECh. 7 - Prob. 2AECh. 7 - Prob. 3AECh. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 2F15Ch. 7 - Prob. 3F15Ch. 7 - Prob. 4F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 6F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 8F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 10F15Ch. 7 - Prob. 11F15Ch. 7 - Prob. 12F15Ch. 7 - Prob. 13F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 1ECh. 7 - Variable Costing Income Statement; Explanation of...Ch. 7 - Reconciliation of Absorption and Variable Costing...Ch. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Prob. 7ECh. 7 - Deducing Changes ¡n Inventories LO7—3 Parker...Ch. 7 - Variable and Absorption Costing Unit Product Costs...Ch. 7 - Prob. 10ECh. 7 - Segmented Income Statement L07—4 Wingate Company,...Ch. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Variable Costing Unit Product Cost and Income...Ch. 7 - Absorption Costing Unit Product Cost and Income...Ch. 7 - Working with a Segmented Income Statement;...Ch. 7 - Prob. 17ECh. 7 - Prob. 18PCh. 7 - Variable Costing Income Statement; Reconciliation...Ch. 7 - Variable and Absorption Costing Unit Product Costs...Ch. 7 - Segment Reporting and Decision-Making L07—4 Vulcan...Ch. 7 - Prob. 22PCh. 7 - Absorption and Variable Costing; Production...Ch. 7 - Companywide and Segment Break-Even Analysis;...Ch. 7 - Prepare and Interpret Income Statements; Changes...Ch. 7 - Prob. 26PCh. 7 - Variable and Absorption Costing Unit Product Costs...
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