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Vulcan Company's contribution format Income statement for June is as follows: Vulcan Company Income Statement For the Month Ended June 30 Sales Variable expenses


 

Vulcan Company's contribution format Income statement for June is as follows: Vulcan Company Income Statement For the Month Ended June 30 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 900,000 408,000 492,000 480,000 $ 12,000 Management wants to improve profits and gathered the following data: a. The company is divided into two sales territories-Northern and Southern. The Northern Territory recorded $400,000 in sales and $208,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $180,000 and $145,000 are traceable to the Northern and Southern Territories, respectively. The rest of the fixed expenses are common to the two territories. b. The company is the exclusive distributor for two products-Paks and Tibs. Sales of Paks and Tibs totaled $160,000 and $240,000, respectively, In the Northern territory during June. Variable expenses are 28% of the selling price for Paks and 68% for Tibs. Cost records show $78,400 of the Northern Territory's fixed expenses are traceable to Paks and $55,200 to Tibs, with the remainder common to the two products. Required: 1-a. Prepare contribution format income statements for the total company segmented by sales territories. 1-b. Prepare contribution format Income statements for the Northern Territory segmented by product line.

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