Brabant NV ofthe Netherlands is a wholesale distributor of Dutch cheese$ that sells throughout the European Community Unfortunately, the company's profits have been declining, which has caused considerable concern. To help understand the condition of the company, the managing director of the company has requested that the monthly income statement be segmented by sales territory Accordingly the company's accounting department has prepared the following statement for March, the most recent month. (The Dutch currency is the euro which is designated by .) Sales Southern Middle Europe Northern Europe 312,000 798,000 695,000 Europe Sales Ternitorial expenses (traceable) Cost of goods sold Salaries Insurance Advertising Depreciation Shipping 97,000 235,000 316,000 59.000 15,700 102,000 238.000238,000 34,000 29,000 60,000 8,700 111,000 13,800 21,000 16,000 28,000 37,000 Total territorial expenses 304,700 610,700 743,800 Territorial income (loss before corporate expenses 7,300 187.300 (48,800) Corporate expenses Advertising (general) General administrative 16,000 19,000 39,000 19,000 36,000 19,000 Total corporate expenses 5,000 58,000 55,000 Net operating income (loss) (27,700) 129,300 (103,800) Cost of goods sold and shipping expenses are both variable; other costs are all fxed. Brabant NV purchases cheeses at auction and from farmers' cooperatives, and it distributes them in the three territories listed above. Each of the three sales territories has its own manager and sales staff. The cheeses vary widely in profitability, some have a high margin and some have a low margin. (Certain cheeses, after having been aged for long periods, are the most expensive and carry the highest margins.)