a) Total Fixed Expense = $485,000

Fixed cost traceable to Northern Territory = $185,000

Fixed cost traceable to Southern Territory = $94,500

Remaining fixed cost to be distributed equally in each center = $485,000 - $185,000 - $94,500 = $205,500

Fixed Cost for Northern territory = Fixed cost directly traceable + 50% of total remaining fixed cost

=> $185,000 + $102,750 = $287,750

Fixed Cost for Southern territory = Fixed cost directly traceable + 50% of total remaining fixed cost

=> $94,500 + $102,750 = $197,250

Northern Territory

Income Statement

For the Month Ended June 30

Sales

$500,000

Less: Variable expenses

$285,000

Contribution margin

$215,000

Less: Fixed expenses

$287,750

Net operating income

-$72,750

Southern Territory

Income Statement

For the Month Ended June 30

Sales

$350,000

Less: Variable expenses

$35,000

Contribution margin

$315,000

Less: Fixed expenses

$197,250

Net operating income

$117,750

b) Variable Expense for Paks = $200,000 x 27% = $54,000

Variable Expense for Tibs = $300,000 x 77% = $231,000

Fixed Expense for Tibs = $287,750 - $94,000 = $193,750

Northern Territory - Sale of Paks

Income Statement

For the Month Ended June 30

Sales

$200,000

Less: Variable expenses

$54,000

Contribution margin

$146,000

Less: Fixed expenses

$94,000

Net operating income

$52,000

Northern Territory - Sale of Tibs

Income Statement

For the Month Ended June 30

Sales

$300,000

Less: Variable expenses

$231,000

Contribution margin

$69,000

Less: Fixed expenses

$193,750

Net operating income

-$124,750