Script, Inc., has two product lines. The September income statements of each product line and the company are as follows: SCRIPT, INC. Product Line and Company Income Statements For Month of September Pens Pencils Total Sales $30,000 $30,000 $60,000 Less variable expenses (12,000) (12,000) (24,000) Contribution margin 18,000 18,000 36,000 Less direct fixed expenses (9,000) (7,000) (16,000) Product margin $9,000 $11,000 20,000 Less common fixed expenses (6,000) Net income $14,000Pens and pencils are sold in two territories, Florida and Alabama, as follows: Florida AlabamaPen sales $18,000 $12,000Pencil sales 9,000 21,000Total sales $27,000 $33,000The common fixed expenses are traceable to each territory as follows:Florida fixed expenses $2,000Alabama fixed expenses 3,000Home office administration fixed expenses 1,000Total common fixed expenses $6,000The 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. Required:Prepare income statements segmented by territory for September.

                                    Script, Inc.

                   Territory and Company Income Statements

                         For the Month of September

                           Florida$   Alabama$  Company Total$

Sales

Pens                       18000      12000       30000

Pencils                    9000      21000        30000

Total sales [A]        27000    33000       60000

Variable cost

Pens                       7200        4,800        12000

                            [18000*.4]  [12000*.4]

[12000 Variable cost / 30000 = 0.40 per pen ]

Pencils                    3600        8400        12000

                             [9000*.4]   [21000*.4]

[12000 Variable cost /30000 = 0.4 per pencil]

Total var. cost [B]    10800       13200       24000

Contribution A-B    16200      19800       36000

D. fixed expenses     2000       3000        5000

Territory margin   14200       16800      31000

Common fixed expenses

Pen               9000

Pencil            7000

Home office  1000

Total              17,000                                    (17000)

Net income                                                   14000

answer founder's agreement;