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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 $$400,000$ in sales and $$200,000$ in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $$172,000$ and $$135,000$ 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 $$200,000$ and $$200,000,$ respectively, in the Northern territory during June. Variable expenses are $26\%$ of the selling price for Paks and $74\%$ for Tibs. Cost records show that $$94,000$ of the Northern Territory's fixed expenses are traceable to Paks and $$42,000$ to Tibs, with the remainder common to the two products.

Required:

$1-$a$.$ Prepare contribution format segmented income statements for the total company broken down between sales territories.

$1-$b$.$ Prepare contribution format segmented income statements for the Northern Territory broken down by product line.

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