Question

Exercise 6-4 Basic Segmented Income Statement [LO6-4] Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit $ 8.00 $ 38.00 Variable expenses per unit $ 3.00 $ 10.00 Traceable fixed expenses per year $ 134,000 $ 34,000 Common fixed expenses in the company total $106,000 annually. Last year the company produced and sold 41,500 units of Weedban and 25,000 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines.

Answer 1

Answer

• Contribution margin Income Statement

	Total Company	Weedban	Greengrow
Sales	$1,282,000	$332,000	$950,000
Variable expenses	$539,500	$124,500	$415,000
Contribution margin	$742,500	$207,500	$535,000
Traceable Fixed expenses	$168,000	$134,000	$34,000
Product Line Segment Margin	$574,500	$73,500	$501,000
Common Fixed expenses not traceable to products	$106,000
Net Operating Income	$468,500

--Working

	Weedban	Greengrow
Sales	=41500*8	=25000*38
Variable expenses	=41500*3	=41500*10
Contribution margin	$207,500	$535,000
Traceable Fixed expenses	134000	34000
Product Line Segment Margin	$73,500	$501,000