N10 X V A B C D E F G H J K L M N O P Q R S T 4 Page -1 P11-17 Segmented Reporting & Decision Making Creaston limited's most recent monthly contribution format income statement is given below: Sales 900,000 100% Variable expenses 408,000 45.30% 10 Contribution Margin 492,000 54.70% 11 Fixed expenses 465,000 51.70% 12 Operating inocme 27,000 3.00% 13 Management is disapponed with the performance & is wondering what can be done to improve profits 14 By examining Sales & cost records, you have determined the following: 15 16 a The Co is divided into two sales trerritories -Central & Eastern. The Central territory recorded $400,000 in 17 sales & $208,000 in variable expenses during May. The remaining sales & variable expenses were recorded in 18 Eastern territiory. Fixed expenses of $160,000 & $130,000 are traceable to Central & Eastern territiories respectively 19 The rest of the fixed expenses are common to the two territiories 20 21 b The Co is the exclusive distributor for two products -Kiks & Dows. Sales of Kiks & Dows totalled $100,000 22 & $300,000 respectively in Central territory during May. Variable expenses are 25% of the Selling Price for Kiks 23 & 61% for Dows: Cost records show that $60,000 of Central's fixed expenses are traceable to Kiks & $54,000 to 24 Dows, with the remainder common to the two products 25 Activate WindowsN10 X V fc A B C D E F G H K L M N P Q R S T U V 25 26 Required: 1) Prepare a Contribution Format segmented Income Sts, first showing the total Company broken 27 down between sales territiories & then showing Central territiory broken down by product line 28 Show both Amount & Percentage columns for the company in total & for each segment 29 Round % computations to one decimal 30 31 2) Look at the Statement you have prepared showing the total company segmented by Sales 32 territiory. Which points revealed by this Statement should be brought to Management's attention? 33 34 3) Look at the Statement you have prepared showing Central Territiory segmentred by product lines 35 Which points revealed by this Statement should be brought to Management's attention? 36 37 38 Use the outline below: 39 40 Total % Central % Eastern % 41 1a) 42 Sales 900,000 100% 43 Variable Exp Cont Margin 45 Traceable Fix Exp 46 Territory Segment Margin Common Fixed Exp 48 Operating Income Activate Windows Sheet1 Go to Settings to activate Windows.N10 X V A C D E F G H J K L M N O P Q R S T U V 50 51 Central Product Line 52 1b) Territory Kiks % Dows 53 Sales 400,000 100% 54 Variable Exp 55 Cont Margin 56 Traceable Fix Exp 57 Prod Line Segment Margin 58 Common Fixed Exp 59 Sales Territory Segment Margin 60 61 62 63 Enter your answers to Parts 2) & 3) on this page 64 65 66 67 68 69 70 71 72 73 Activate Windows