Vulcan Companyâs contributionformat income statement for June is given below:
Vulcan Company
Income Statement
For the Month Ended June 30 Sales $ 900,000 Variableexpenses 408,000 Contributionmargin 492,000 Fixed expenses 480,000 Net operatingincome $ 12,000
Management is disappointed with the companyâs performance and iswondering what can be done to improve profits. By examining salesand cost records, you have determined the following:
a. The company is divided into two sales territoriesâNorthern andSouthern. The Northern Territory recorded $400,000 in sales and$208,000 in variable expenses during June; the remaining sales andvariable expenses were recorded in the Southern Territory. Fixedexpenses of $180,000 and $145,000 are traceable to the Northern andSouthern Territories, respectively. The rest of the fixed expensesare common to the two territories.
b. The company is the exclusive distributor for two productsâPaksand Tibs. Sales of Paks and Tibs totaled $160,000 and $240,000,respectively, in the Northern territory during June. Variableexpenses are 28% of the selling price for Paks and 68% for Tibs.Cost records show that $78,400 of the Northern Territoryâs fixedexpenses are traceable to Paks and $55,200 to Tibs, with theremainder common to the two products.
Required:
1a. Prepare contribution format segmented income statements for thetotal company broken down between sales territories. (Roundthe percentage answers to one decimal place (i.e .1234 should beentered as 12.3))
| Vulcan Companyâs contributionformat income statement for June is given below: |
| Vulcan Company Income Statement For the Month Ended June 30 | ||||
| Sales | $ | 900,000 | ||
| Variableexpenses | 408,000 | |||
| Contributionmargin | 492,000 | |||
| Fixed expenses | 480,000 | |||
| Net operatingincome | $ | 12,000 | ||
Management is disappointed with the companyâs performance and iswondering what can be done to improve profits. By examining salesand cost records, you have determined the following: |
| a. | The company is divided into two sales territoriesâNorthern andSouthern. The Northern Territory recorded $400,000 in sales and$208,000 in variable expenses during June; the remaining sales andvariable expenses were recorded in the Southern Territory. Fixedexpenses of $180,000 and $145,000 are traceable to the Northern andSouthern Territories, respectively. The rest of the fixed expensesare common to the two territories. |
| b. | The company is the exclusive distributor for two productsâPaksand Tibs. Sales of Paks and Tibs totaled $160,000 and $240,000,respectively, in the Northern territory during June. Variableexpenses are 28% of the selling price for Paks and 68% for Tibs.Cost records show that $78,400 of the Northern Territoryâs fixedexpenses are traceable to Paks and $55,200 to Tibs, with theremainder common to the two products. |
| Required: |
| 1a. | Prepare contribution format segmented income statements for thetotal company broken down between sales territories. (Roundthe percentage answers to one decimal place (i.e .1234 should beentered as 12.3)) |
Related questions
| Vulcan Companyâs contributionformat income statement for June is given below: |
| Vulcan Company Income Statement For the Month Ended June 30 | ||||
| Sales | $ | 900,000 | ||
| Variableexpenses | 408,000 | |||
| Contributionmargin | 492,000 | |||
| Fixed expenses | 465,000 | |||
| Net operatingincome | $ | 27,000 | ||
Management is disappointed with the companyâs performance and iswondering what can be done to improve profits. By examining salesand cost records, you have determined the following: |
| a. | The company is divided into two sales territoriesâNorthern andSouthern. The Northern Territory recorded $400,000 in sales and$228,000 in variable expenses during June; the remaining sales andvariable expenses were recorded in the Southern Territory. Fixedexpenses of $168,000 and $130,000 are traceable to the Northern andSouthern Territories, respectively. The rest of the fixed expensesare common to the two territories. |
| b. | The company is the exclusive distributor for two productsâPaksand Tibs. Sales of Paks and Tibs totaled $140,000 and $260,000,respectively, in the Northern territory during June. Variableexpenses are 31% of the selling price for Paks and 71% for Tibs.Cost records show that $64,400 of the Northern Territoryâs fixedexpenses are traceable to Paks and $52,000 to Tibs, with theremainder common to the two products. |
| Required: |
| 1a. | Prepare contribution format segmented income statements for thetotal company broken down between sales territories. (Roundthe percentage answers to one decimal place (i.e .1234 should beentered as 12.3)) |
| 1b. | Prepare contribution format segmented income statements for theNorthern Territory broken down by product line. (Round thepercentage answers to one decimal place (i.e .1234 should beentered as 12.3)) |
| Vulcan Companyâs contributionformat income statement for June is given below: |
| Vulcan Company Income Statement For the Month Ended June 30 | ||||
| Sales | $ | 900,000 | ||
| Variableexpenses | 400,000 | |||
| Contributionmargin | 500,000 | |||
| Fixed expenses | 470,000 | |||
| Net operatingincome | $ | 30,000 | ||
Management is disappointed with the companyâs performance and iswondering what can be done to improve profits. By examining salesand cost records, you have determined the following: |
| a. | The company is divided into two sales territoriesâNorthern andSouthern. The Northern Territory recorded $400,000 in sales and$200,000 in variable expenses during June; the remaining sales andvariable expenses were recorded in the Southern Territory. Fixedexpenses of $172,000 and $135,000 are traceable to the Northern andSouthern Territories, respectively. The rest of the fixed expensesare common to the two territories. |
| b. | The company is the exclusive distributor for two productsâPaksand Tibs. Sales of Paks and Tibs totaled $200,000 and $200,000,respectively, in the Northern territory during June. Variableexpenses are 26% of the selling price for Paks and 74% for Tibs.Cost records show that $94,000 of the Northern Territoryâs fixedexpenses are traceable to Paks and $42,000 to Tibs, with theremainder common to the two products. |
| Required: |
| 1a. | Prepare contribution format segmented income statements for thetotal company broken down between sales territories. (Roundthe percentage answers to one decimal place (i.e .1234 should beentered as 12.3)) |
| 1b. | Prepare contribution format segmented income statements for theNorthern Territory broken down by product line. (Round thepercentage answers to one decimal place (i.e .1234 should beentered as 12.3)) |
| Vulcan Companyâs contributionformat income statement for June is given below: |
| Vulcan Company Income Statement For the Month Ended June 30 | ||||
| Sales | $ | 900,000 | ||
| Variableexpenses | 400,000 | |||
| Contributionmargin | 500,000 | |||
| Fixed expenses | 470,000 | |||
| Net operatingincome | $ | 30,000 | ||
Management is disappointed with the companyâs performance and iswondering what can be done to improve profits. By examining salesand cost records, you have determined the following: |
| a. | The company is divided into two sales territoriesâNorthern andSouthern. The Northern Territory recorded $400,000 in sales and$200,000 in variable expenses during June; the remaining sales andvariable expenses were recorded in the Southern Territory. Fixedexpenses of $172,000 and $135,000 are traceable to the Northern andSouthern Territories, respectively. The rest of the fixed expensesare common to the two territories. | |||||||||
| b. | The company is the exclusive distributor for two productsâPaksand Tibs. Sales of Paks and Tibs totaled $200,000 and $200,000,respectively, in the Northern territory during June. Variableexpenses are 26% of the selling price for Paks and 74% for Tibs.Cost records show that $94,000 of the Northern Territoryâs fixedexpenses are traceable to Paks and $42,000 to Tibs, with theremainder common to the two products.
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