Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Creaston Limited's most recent monthly contribution format income statement is given below: CREASTON LIMITED Income Statement For the Month Ended May 31 Sales $900,000

image text in transcribed

Creaston Limited's most recent monthly contribution format income statement is given below: CREASTON LIMITED Income Statement For the Month Ended May 31 Sales $900,000 100.0% Variable expenses 408,000 45.3 Contribution margin 492,000 54.7 Fixed expenses 465,000 51.7 Operating income $ 27,000 3.0% 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: a. The company is divided into two sales territories-Central and Eastern. Central Territory recorded $400,000 in sales and $208,000 in variable expenses during May. The remaining sales and variable expenses were recorded in Eastern Territory. Fixed expenses of $160,000 and $130,000 are traceable to Central and Eastern Territories, respectively. The rest of the fixed expenses are common to the two territories. b. The company is the exclusive distributor for two products-Kiks and Dows. Sales of Kiks and Dows totalled $100,000 and $300,000, respectively, in Central Territory during May. Variable expenses are 25% of the selling price for Kiks and 61% for Dows. Cost records show that $60,000 of Central Territory's fixed expenses are traceable to Kiks and $54,000 to Dows, with the remainder common to the two products. Required: 1. Prepare contribution format segmented income statements, first showing the total company broken down between sales territories and then showing Central Territory broken down by product line. Show both Amount and Percentage columns for the company in total and for each segment. (Round your percentage answers to 1 decimal place.) Sales Territory Total Company Amount Central Eastern % Amount % Amount % 0 0.0 0 0.0 0 0.0 0 0.0 $ 0 0.0 $ 0 0.0 $ 0 0.0 Product Line Kiks Dows % Amount % Amount % Central Territory Amount 0 0.0 0 0.0 0 0.0 0 0.0 $ 0 0.0 $ 0 0.0 $ 0 0.0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Theory and Practice

Authors: Eugene F. Brigham, Michael C. Ehrhardt

15th edition

130563229X, 978-1305632301, 1305632303, 978-0357685877, 978-1305886902, 1305886909, 978-1305632295

More Books

Students also viewed these Finance questions

Question

In which extracurricular activities did you participate? Why? LO.1

Answered: 1 week ago

Question

Describe your most rewarding college experiences. LO.1

Answered: 1 week ago