PROBLEM 6-19 Sogmont Raporting and Docision aking LO4 The most recent monthly contribution format income statement for Reston Company is given below: Foston Incomo Statomant For tho Month Endod May 31 eXcel Salos Variablo sooo,000 100.0% 408,000 45.3 42,000 64.7 465,000 51.7 Foxod oxponsozo Nat oporating incoma .. s27,000 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 ternitories Central and Fastern. The Central Tem- ory recorded S400,000 in sales and $208.000 in variable expenses during May. The remain- ing sales and variable expenses were recorded in the Eastern Ternitory. Fixed expenses of $160,000 and $130,000 are traceable to the Central and Fastern Territories, respectively. The rest of the fixed expenses are common to the two territorics b. The company is the exclusive distnibutor for two products Awls and Pows. Sales of Awls and Pows totaled $100.000 and $300000, respectively, in the Central Territory during May. Vari able expenses are 25% of the selling price for Awls and 614 forPows. Cost records show that $60,000 of the Central Territory 's fixed expenses are traceable to Awis and $54,000 to Pows. with the remainder common to the two products Roqurod: 1. Prepare contribution format segmented income statements, firt showing the total company bmken down between sales territories and then showing the Central Territory broken down by product line. In addition, for the company as a whoie and for each segment show each item on 2. Look at the statement you have prepared showing the total company segmented by sales lemi- 3. Look at the stalement you have greparsd showing the Central Temitory segmented by prnduct the segmented income statements as a percent of sales. tory. What points revealed by this statement should be brought to management's attention? lines. What points revcaled by this statement should be brought to management's attention