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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 $$300,000$ in sales and

$$156,000$ in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern territory. Fixed

expenses of $$120,000$ and $$108,000$ 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 $$50,000$ and $$250,000,$

respectively, in the Northern territory during June. Variable expenses are $22\%$ of the selling price for Paks and $58\%$ for Tibs. Cost

records show $$30,000$ of the Northern territory's fixed expenses are traceable to Paks and $$40,000$ to Tibs, with the remainder common

to the two products.

Required:

Prepare contribution format income statements showing the total company segmented by sales territories and then the Northern

territory segmented by product line. Show each item on these segmented income statements as a percent of sales.

What insights would you share with management about the Northern and Southern territories?

What insights would you share with management about Paks and Tibs?

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