Problem:

Vulcan Company's contribution format income statement for Juneis given below:

Vulcan Company Income Statement For the Month Ended June 30
Sales	$750,000
Variable expenses	336,000
Contribution margin	414,000
Fixed expenses	378,000
Netoperating income	$36,000

Management is disappointed withthe company's performance and is wondering what can be done toimprove profits. By examining sales and cost records, you havedetermined the following:

a.

The company is divided into two sales territoriesâNorthern andSouthern. The Northern territory recorded $300,000 in sales and$156,000 in variable expenses during June; the remaining sales andvariable expenses were recorded in the Southern territory. Fixedexpenses of $120,000 and $108,000 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 $50,000 and $250,000,respectively, in the Northern territory during June. Variableexpenses are 22% of the selling price for Paks and 58% for Tibs.Cost records show that $30,000 of the Northern territory's fixedexpenses are traceable to Paks and $40,000 to Tibs, with theremainder common to the two products.

Question plus work done so far:

Prepare contribution format segmented income statements.(Round percentage computationsto 1 decimal place. Omit the "$" and "%" signs in yourresponse.)

			Sales Territory
	Total Company		Northern		Southern
	Amount	%	Amount	%	Amount	%
Sales	$750,000	100	300,000$		$450,000
Variable expenses	336,000		156,000		180,000
Contribution margin	414,000		144,000		270,000
Traceable fixed expenses	228,000		120,000		108,000
Sales territory segment margin	186,000		$ 24,000		$ 162,000
Common fixed expenses	150,000
Netoperating income	$36,000

			Product Line
	Northern Territory		Paks		Tibs
	Amount	%	Amount	%	Amount	%
Sales	$300,000	100	$50,000		$250,000
Variable expenses	156,000		11,000	22	145,000	58
Contribution margin	144,000		39,000		105,000
Traceable fixed expenses	70,000		30,000		40,000
Product line segment margin	74,000		$9,000		$65,000
Common fixed expenses	50,000
Sales territory segment margin	$ 24,000

My Question:

How do I get the percentage shown in each cell? the onlypercentage I got right so far are correct because they were givento me in the problem. I just dont know how to get the rest.

First person to explain how to get the % for the cells willreceive life saver. Also the % cell for variable expenses for thesecond segment is not 80%.

		10.50%; 11.925%
		10.50%; 14.475%
		7.50%; 9.375%
		7.50%; 11.925%
		7.50%; 14.475%

Vulcan Company Income Statement For the Month Ended June 30
Sales	$	750,000
Variable expenses		336,000

Contribution margin		414,000
Fixed expenses		378,000

Netoperating income	$	36,000

1-a.	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).)

1-b.	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).)

	Total		Dirt Bikes		Mountain Bikes		Racing Bikes
Sales	$	300,000	$	90,000	$	150,000	$	60,000
Variable manufacturing andselling expenses		120,000		27,000		60,000		33,000
Contribution margin		180,000		63,000		90,000		27,000
Fixed expenses:
Advertising, traceable		30,000		10,000		14,000		6,000
Depreciation of specialequipment		23,000		6,000		9,000		8,000
Salaries of product-linemanagers		35,000		12,000		13,000		10,000
Allocated common fixedexpenses*		60,000		18,000		30,000		12,000
Total fixed expenses		148,000		46,000		66,000		36,000
Net operating income (loss)	$	32,000	$	17,000	$	24,000	$	(9,000	)

	Total	Dirt Bikes	Mountain Bikes	Racking Bikes
Sales	300000	90000	150000	60000
Variable manufacturing and selling expenses	180000	63000	90000	27000
contribugin margin	180,000	63,000	90,000	27,000
Advertising, traceable	30,000	10,000	14,000	6,000
depriciation of special equipment	23,000	6,000	9,000	8,000
salaries of product line managers	35,000	12,000	13,000	10,000
allocated common fixed expenses	60,000	18,000	30,000	12,000

Total fixed expenses	148,000	46,000	66,000	36,000
Net operating income	32,000	17,000	24,000	-9,000

Assets		Adjusted Basis	FMV
Cash		14400	14400
Equipment	135000
Minus: Accumulated Depreciation	(65000)	70000	60800
Building	85000
Minus: Accumulated Depreciation	(50000)	35000	51200
Land		25600	33600
Total		45000	160000

Adjusted basis of Property transferred to the corporation
Plus	Gain recognized by transferor
Minus	FMV of Boot Received
Adjusted basis of stock

SCRIPT, INC. Product Line and Company Income Statements For Month of September
	Pens	Pencils	Total
Sales	$ 30,000	$ 30,000	$ 60,000
Less variable expenses	(12,000)	(12,000)	(24,000)
Contribution margin	18,000	18,000	36,000
Less direct fixed expenses	(9,000)	(7,000)	(16,000)
Product margin	$ 9,000	$ 11,000	20,000
Less common fixed expenses			(6,000)
Net income			$ 14,000

	Florida	Alabama
Pen sales	$ 18,000	$ 12,000
Pencil sales	9,000	21,000
Total sales	$ 27,000	$ 33,000

	Yes
	No

	Yes
	No

	Cash	Equipment	Building	Land
Transferorâs adjusted basis in property transferred to thecorporation
Pus:
Minus:
Transferee corporationâs basis in property

Script, Inc. Territory and Company Income Statements For the Month of September
	Florida	Alabama	Company Totals
Sales:
Pens	$Answer	$Answer	$Answer
Pencils	Answer	Answer	Answer
Total sales	Answer	Answer	Answer
Variable costs:
Pens	Answer	Answer	Answer
Pencils	Answer	Answer	Answer
Total	Answer	Answer	Answer
Contribution margin	Answer	Answer	Answer
Direct fixed expenses	Answer	Answer	Answer
Territory margin	$Answer	$Answer	Answer
Common fixed expenses:
Pens			Answer
Pencils			Answer
Home office			Answer
Total			Answer
Net income			$Answer

Florida fixed expenses	$ 2,000
Alabama fixed expenses	3,000
Home office administration fixed expenses	1,000
Total common fixed expenses	$ 6,000

jagdishbhagat

dbtsolver669Deendayal Upadhyaya Gorakhpur University

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