Problem $6-21($Algo$)$ Segment Reporting and Decision Making $[$LO$6-4]$

Vulcan Company's contribution format income statement for June is as follows:

Management wants to improve profits and gathered the following data:

a$.$ The company is divided into two sales territories$-$Northern and Southern. The Northern Territory recorded $$500,000$ 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 $$245,000$ and $$88,000$ 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 $$250,000$ and $$250,000,$

respectively, in the Northern territory during June. Variable expenses are $21\%$ of the selling price for Paks and $59\%$ for Tibs. Cost

records show $$102,500$ of the Northern Territory's fixed expenses are traceable to Paks and $$52,500$ to Tibs, with the remainder

common to the two products.

Required:

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

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