Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Vulcan Company?s contribution format income statement for June is given below: Vulcan Company Income Statement For the Month Ended June 30 Sales $ 900,000 Variable

Vulcan Company?s contribution format income statement for June is given below:

Vulcan Company Income Statement For the Month Ended June 30
Sales$900,000
Variable expenses400,000
Contribution margin500,000

Fixed expenses450,000
Net operating income$50,000

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 territories?Northern and Southern. The Northern Territory recorded $400,000 in sales and $180,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $200,000 and $115,000 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 $170,000 and $230,000, respectively, in the Northern territory during June. Variable expenses are 22% of the selling price for Paks and 62% for Tibs. Cost records show that $71,400 of the Northern Territory?s fixed expenses are traceable to Paks and $50,600 to Tibs, with the remainder common to the two products.

image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Carl Warren

13th Edition

1133607616, 978-1133607618

More Books

Students also viewed these Accounting questions

Question

What are the four main types of stressors? LO1

Answered: 1 week ago

Question

Are summer stipends available?

Answered: 1 week ago

Question

2. Develop a good and lasting relationship

Answered: 1 week ago

Question

1. Avoid conflicts in the relationship

Answered: 1 week ago