Question
Income Statements Segmented by Territory Script, Inc., has two product lines. The September income statements of each product line and the company are as follows:
Income Statements Segmented by Territory
Script, Inc., has two product lines. The September income statements of each product line and the company are as follows:
SCRIPT, INC. Product Line and Company Income Statements For Month of September
Pens | Pencils | Total | ||
Sales | $25,000 | $30,000 | $55,000 | |
Less variable expenses | (10,000) | (12,000) | (22,000) | |
Contribution margin | 15,000 | 18,000 | 33,000 | |
Less direct fixed expenses | (7,000) | (6,000 | (13,000) | |
Product margin | $8,000 | $12,000 | $20,000 | |
| (6,000) | |||
Net income | $14,000 |
Pens and pencils are sold in two territories, Florida and Alabama, as follows:
Florida | Alabama | |
Pen sales | $18,000 | $7,000 |
Pencil sales | 6,000 | 24,000 |
Total sales | $24,000 | $31,000 |
The preceding common fixed expenses are traceable to each territory as follows:
Florida fixed expenses $2,000
Alabama fixed expenses 3,000
Home office administration fixed expenses 1,000
Total common fixed expenses $6,000
The direct fixed expenses of pens, $7,000, and of pencils, $6,000, cannot be identified with either territory. The company's accountants were unable to allocate any of the common fixed expenses to the various segments.
Prepare income statements segmented by territory for September, including a column for the entire firm. Do not use negative signs with your answers.
Script, Inc. Territory and Company Income Statements For the Month of September
Florid | Alabama | Compant totals | |
Sales | |||
Pens | |||
Pencils | |||
Total sales | |||
Variable costs | |||
Pens | |||
Pencils | |||
Total | |||
Contribution margin | |||
Direct fixed expenses | |||
Territory margin |
Common fixed expenses:
|
b) Why are the direct expenses of one type of segment report not necessarily the direct expenses of another type of segment report?
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