Question

Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Selling price per unit Variable expenses per unit Traceable fixed expenses per year Product Weedban Greengrow $ 8.00 $31.00 $ 2.30 $ 10.00 $ 129,000 $ 30,000 Common fixed expenses in the company total $110,000 annually. Last year the company produced and sold 44,000 units of Weedban and 24,000 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines. Total Company Product Line Weedban Greengrow

Answer 1

		Product Line
		Total Company	Weedban	Greengrow
	Sales	1,096,000.00	352,000.00	744,000.00
	Less: Variable expenses	341,200.00	101,200.00	240,000.00
	Contribution margin	754,800.00	250,800.00	504,000.00
	Less: Traceable fixed expenses	159,000.00	129,000.00	30,000.00
	Product line segment margin	595,800.00	121,800.00	474,000.00
	Less: Common fixed expenses
	not traceable to products	110,000.00
	Net operating income	485,800.00
	Explanation
1	Sales:
	Weedban: 44,000 units × $8.00 per unit = $352,000
	Greengrow: 24,000 units × $31.00 per unit = $744,000
2	Variable expenses:
	Weedban: 44,000 units × $2.30 per unit = $101,200
	Greengrow: 24,000 units × $10.00 per unit = $240,000