Drenthe BV of the Netherlands is a wholesale distributor of Dutch cheeses that it sells throughout the European Community. Unfortunately, the companys 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 companys accounting department has prepared the following statement for March, the most recent month. (The Dutch currency is the euro which is designated by .)

	Sales Territory
	Southern Europe		Middle Europe		Northern Europe
Sales		431,000		1,004,000		748,000
Territorial expenses (traceable):
Cost of goods sold		128,000		340,000		321,000
Salaries		70,000		57,000		110,000
Insurance		18,700		17,000		14,500
Advertising		130,000		246,000		247,000
Depreciation		34,000		37,000		34,000
Shipping		23,000		44,000		49,000
Total territorial expenses		403,700		741,000		775,500
Territorial income (loss) before corporate expenses		27,300		263,000		(27,500)
Corporate expenses:
Advertising (general)		28,000		50,000		51,000
General administrative		35,000		31,000		45,000
Total corporate expenses		63,000		81,000		96,000
Net operating income (loss)		(35,700)		182,000		(123,500)

Cost of goods sold and shipping expenses are both variable; other costs are all fixed. Drenthe BV 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.)

Required:

3.

Prepare a new segmented contribution format income statement for May. Show a Total column as well as data for each territory. In addition, for the company as a whole and for each sales territory, show each item on the segmented income statement as a percent of sales. (Note: % columns may not total due to rounding.) (Round percentage answers to 1 decimal place (i.e .1234 should be entered as 12.3).)

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Total

Southern Europe

Middle Europe

Northern Europe

Amount in s

%

Amount in s

%

Amount in s

%

Amount in s

%

Sales

Variable expenses:

Cost of goods sold

Shipping expense

Total variable expenses

Gross margin

Traceable fixed expenses:

Salaries

Insurance

Advertising

Depreciation

Total traceable fixed expenses

Territorial segment margin

Common fixed expenses:

Advertising (general)

General administration

Total common fixed expense

Net operating income

+

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