Presented below is UC Company's contribution format income statement for the month of June: UC Company...
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Presented below is UC Company's contribution format income statement for the month of June: UC Company Income Statement For the Month Ended June 30 Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income Php 7,500,000.00 3,360,000.00 Php 4,140,000.00 3,780,000.00 Php360,000.00 The Management is not happy with the company's performance and is figuring out what can be done to improve profits. After examining the sales and cost records, you have determined the following: 1. The company is divided into two sales territories-Legarda and Gov. Pack. The Legarda territory recorded Php3,000,000 in sales and Php1,560,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Gov. Pack territory. Fixed expenses of Php1,200,000 and Php1,080,000 are traceable to the Legarda and Gov. Pack territories, respectively. The rest of the fixed expenses are common to Legarda and Gov. Pack. 2. The company is the exclusive distributor for two products-U's and C's. Sales of U's and C's totaled Php500,000 and Php2,500,000, respectively, in the Legarda territory during June. Variable expenses are 22% of the selling price for U's and 58% for C's. Cost records show that Php300,000 of the Legarda territory's fixed expenses are traceable to U's and Php400,000 to C's, with the remainder common to the two products. Required: 1. Construct UC company's segmented income statements using contribution format showing: A. the total company broken down between Legarda and Gov. Pack. also show each item on the segmented income statements as a percent of sales for the company as a whole and for each segment B. the Legarda territory broken down between U's and C's. also show each item on the segmented income statements as a percent of sales for each segment. 2. Refer to your response in 1A. What insights revealed by this statement would you bring to the attention of management? 3. Refer to your response in 1B. What insights revealed by this statement would you bring to the attention of management? Presented below is UC Company's contribution format income statement for the month of June: UC Company Income Statement For the Month Ended June 30 Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income Php 7,500,000.00 3,360,000.00 Php 4,140,000.00 3,780,000.00 Php360,000.00 The Management is not happy with the company's performance and is figuring out what can be done to improve profits. After examining the sales and cost records, you have determined the following: 1. The company is divided into two sales territories-Legarda and Gov. Pack. The Legarda territory recorded Php3,000,000 in sales and Php1,560,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Gov. Pack territory. Fixed expenses of Php1,200,000 and Php1,080,000 are traceable to the Legarda and Gov. Pack territories, respectively. The rest of the fixed expenses are common to Legarda and Gov. Pack. 2. The company is the exclusive distributor for two products-U's and C's. Sales of U's and C's totaled Php500,000 and Php2,500,000, respectively, in the Legarda territory during June. Variable expenses are 22% of the selling price for U's and 58% for C's. Cost records show that Php300,000 of the Legarda territory's fixed expenses are traceable to U's and Php400,000 to C's, with the remainder common to the two products. Required: 1. Construct UC company's segmented income statements using contribution format showing: A. the total company broken down between Legarda and Gov. Pack. also show each item on the segmented income statements as a percent of sales for the company as a whole and for each segment B. the Legarda territory broken down between U's and C's. also show each item on the segmented income statements as a percent of sales for each segment. 2. Refer to your response in 1A. What insights revealed by this statement would you bring to the attention of management? 3. Refer to your response in 1B. What insights revealed by this statement would you bring to the attention of management?
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Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
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