Income Statements Segmented by Territory Script, Inc., has two product lines. The September income statements of each product line and the company are as follows: SCRIPT, INC. Product Line and Company Income Statements For Month of September Pens Pencils Total Sales $25,000 $30,000 $55,000 Less variable expenses (10,000) (12,000) (22,000) Contribution margin 15,000 18,000 33,000 Less direct fixed expenses (8,000) (6,000) (14,000) Product margin $7,000 $12,000 $19,000 Less common fixed expenses (6,000) Net income $13,000 Pens and pencils are sold in two territories, Florida and Alabama, as follows: Pen sales Pencil sales Total sales Florida Alabama $11,000 $14,000 13,000 17,000 $24,000 $31,000 The preceding common fixed expenses are traceable to each territory as follows: $2,000 Florida fixed expenses Alabama fixed expenses Home office administration fixed expenses Total common fixed expenses 3,000 1,000 $6,000 The direct fixed expenses of pens, $8,000, and of pencils, $6,000, cannot be identified with either territory. The company's accountants were unable to allocate any of the common fixed expenses to the various segments. Prepare income statements segmented by territory for September, including a column for the entire firm. Do not use negative signs with your answers. Script, Inc. Territory and Company Income Statements For the Month of September Florida Alabama Company Totals Sales: Pens $ 0 $ 0 $ Pencils 0 0 0 Total sales 0 0 0 Variable costs: Pens 0 0 Pencils 0 0 Total 0 0 Contribution margin 0 0 Direct fixed expenses 0 Territory margin $ 0$ Common fixed expenses: Pens Pencils Home office Total Net income (b) Why are the direct expenses of one type of segment report not necessarily the direct expenses of another type of segment report? Because direct expenses are all variable costs. Because only fixed expenses are direct costs. Because costs that may be directly traceable to one segment base (i.e., territory) may not be directly traceable to another segment base (i.e., product). Because management must decide which costs are direct and which are indirect. None of the above. Check