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Homework answers / question archive / Problem: Vulcan Company's contribution format income statement for June is given below: Vulcan Company Income Statement For the Month Ended June 30   Sales $750,000     Variable expenses 336,000     Contribution margin 414,000     Fixed expenses 378,000     Net operating income $36,000          Management is disappointed with the company's performance and is wondering what can be done to improve profits

Problem: Vulcan Company's contribution format income statement for June is given below: Vulcan Company Income Statement For the Month Ended June 30   Sales $750,000     Variable expenses 336,000     Contribution margin 414,000     Fixed expenses 378,000     Net operating income $36,000          Management is disappointed with the company's performance and is wondering what can be done to improve profits

Accounting

Problem:

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

Vulcan Company
Income Statement
For the Month Ended June 30
  Sales $750,000  
  Variable expenses

336,000  

  Contribution margin 414,000  
  Fixed expenses

378,000  

  Net operating income

$36,000  


 

     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 $300,000 in sales and $156,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern territory. Fixed expenses of $120,000 and $108,000 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 $50,000 and $250,000, respectively, in the Northern territory during June. Variable expenses are 22% of the selling price for Paks and 58% for Tibs. Cost records show that $30,000 of the Northern territory's fixed expenses are traceable to Paks and $40,000 to Tibs, with the remainder common to the two products.


Question plus work done so far:

Prepare contribution format segmented income statements. (Round percentage computations to 1 decimal place. Omit the "$" and "%" signs in your response.)

 

      Sales Territory
  Total Company Northern Southern
  Amount % Amount % Amount %
  Sales $750,000   100   300,000$       $ 450,000    
  Variable expenses

336,000

 

156,000

 

180,000

 

  Contribution margin

414,000

 

144,000

 

270,000

 

  Traceable fixed expenses

228,000

 

120,000

 

108,000

 

  Sales territory segment margin 186,000    

$ 24,000

 

$ 162,000

 

  Common fixed expenses 150,000            
  Net operating income

$36,000 

 

       

 

      Product Line
  Northern Territory Paks Tibs
  Amount % Amount % Amount %
  Sales $ 300,000 100   $50,000      $250,000     
  Variable expenses

156,000

 

11,000

22

145,000

58

  Contribution margin 144,000     39,000     105,000    
  Traceable fixed expenses

70,000

 

30,000

 

40,000

 

  Product line segment margin 74,000    

$9,000 

 

$65,000 

 

  Common fixed expenses 50,000            
  Sales territory segment margin

$ 24,000

 

       

 

 

My Question:

How do I get the percentage shown in each cell? the only percentage I got right so far are correct because they were given to me in the problem. I just dont know how to get the rest.

 

First person to explain how to get the % for the cells will receive life saver. Also the % cell for variable expenses for the second segment is not 80%.

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