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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 $$400,000$ in sales and $$168,000$ in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $$212,000$ and $$130,000$ 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 $25\%$ of the selling price for Paks and $59\%$ for Tibs. Cost records show $$90,000$ of the Northern Territory's fixed expenses are traceable to Paks and $$40,000$ 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.

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