The most recent monthly contribution format income statement for New York Company is given below: New York Company Income Statement For the Month Ended May 31

Revenues . . . . . . . . . . . . . . . . . $ 900,000 100.0%

Variable expenses . . . . . . . . . . . . 408,000 45.3%

Contribution margin . . . . . . . . . . . 492,000 54.7%

Fixed expenses . . . . . . . . . . . . . . 465,000 51.7%

Net operating income . . . . . . . . . $ 27,000 3.0%

Management is disappointed with the companys 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. The Central Territory recorded $ 400,000 in Revenues and $ 208,000 in variable expenses during May. The remaining Revenues and variable expenses were recorded in the Eastern Territory. Fixed expenses of $ 160,000 and $ 130,000 are traceable to the Central and Eastern Territories, respectively. The rest of the fixed expenses are common to the two territories.

b. The company has two divisions Web Hosting and Web Analytics. Revenues for Hosting and Analytics totaled $ 100,000 and $ 300,000, respectively, in the Central Territory during May. Variable expenses are 25% of the selling price for Hosting and Analytics. Cost records show that $ 60,000 of the Central Territorys fixed expenses are traceable to Hosting and $ 54,000 to Analytics, with the remainder common to the two divisions.

Answer the following:

B. Prepare contribution format segmented income statements, first showing the total company broken down between sales territories and then showing the Central Territory broken down by division line. Show each item on the segmented income statements as a percent of Revenues.

C1. Explain the purpose of each statement and the information each is meant to convey.

C2. Provide your analysis of the statement you have prepared showing the total company segmented by sales territory. What does this reveal about the Company. State the actions you would recommend for improving the companys results after analyzing this statement.

C3. Provide your analysis of the statement you have prepared showing the Central Territory segmented by divisions. What does this statement reveal. State the actions you would recommend for improving the companys results after analyzing this statement.