$1$

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$10$ points

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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 $12\mathrm{.}3).)$

$\backslash$table$[[,,,$Sales Territory$],[,$Total Company,,Southern$],[,$Amount,$\%,,$Amount,$\%],[,,,,,],[,,,,,],[,,,,,],[,,,,,],[,,,,,],[,,,,,],[,,,,,]]$Vulcan Company$$s contribution format income statement for June is as follows:

Vulcan Company

Income Statement

For the Month Ended June $30$

Sales $ $800,000$

Variable expenses $300,000$

Contribution margin $500,000$

Fixed expenses $470,000$

Net operating income $ $30,000$

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:

The company is divided into two sales territories$$Northern and Southern. The Northern Territory recorded $$400,000$ in sales and $$216,000$ in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $$152,000$ and $$96,000$ are traceable to the Northern and Southern Territories, respectively. The rest of the fixed expenses are common to the two territories.

The company is the exclusive distributor for two products$$Paks and Tibs. Sales of Paks and Tibs totaled $$100,000$ and $$300,000,$ respectively, in the Northern territory during June. Variable expenses are $15\%$ of the selling price for Paks and $67\%$ for Tibs. Cost records show that $$51,000$ of the Northern Territory$$s fixed expenses are traceable to Paks and $$72,000$ to Tibs, with the remainder common to the two products.