Vulcan Company$$s contribution format income statement for June is as follows:

Vulcan Company

Income Statement

For the Month Ended June $30$

Sales $ $850,000$

Variable expenses $308,000$

Contribution margin $542,000$

Fixed expenses $490,000$

Net operating income $ $52,000$

Management wants to improve profits and gathered the following data:

The company is divided into two sales territories$$Northern and Southern. The Northern Territory recorded $$400,000$ in sales and $$200,000$ in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $$152,000$ and $$126,000$ are traceable to the Northern and Southern Territories, respectively. The rest of the fixed expenses are common to the two territories.

The company is the exclusive distributor for two products$$Paks and Tibs. Sales of Paks and Tibs totaled $$180,000$ and $$220,000,$ respectively, in the Northern territory during June. Variable expenses are $28\%$ of the selling price for Paks and $68\%$ for Tibs. Cost records show $$86,400$ of the Northern Territory$$s fixed expenses are traceable to Paks and $$46,200$ to Tibs, with the remainder common to the two products.