Reference no: EM131736944

Problem - 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:

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	(9,000)	(7,000)	(16,000)
Product margin	$6,000	$11,000	$17,000
Less common fixed expenses			(6,000)
Net income			$11,000

Pens and pencils are sold in two territories, Florida and Alabama, as follows:

Pen sales	$12,000	$13,000
Pencil sales	8,000	22,000
Total sales	$20,000	$35,000

The preceding common fixed expenses are traceable to each territory as follows:

Florida fixed expenses	$2,000
Alabama fixed expenses	3,000
Home office administration fixed expenses	1,000
Total common fixed expenses	$6,000

The direct fixed expenses of pens, $9,000, and of pencils, $7,000, cannot be identified with either territory. The company's accountants were unable to allocate any of the common fixed expenses to the various segments.

(a) Prepare income statements segmented by territory for September, including a column for the entire firm. Do not use negative signs with your answers.