Question

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	$	11.00	$	40.00
Variable expenses per unit	$	3.00	$	11.00
Traceable fixed expenses per year	$	130,000	$	42,000

Common fixed expenses in the company total $107,000 annually. Last year the company produced and sold 43,000 units of Weedban and 24,000 units of Greengrow.

Required:

Prepare a contribution format income statement segmented by product lines.

Answer 1

Sales Variable expenses Contribution Margin Traceable fixed expenses Segment Income Common fixed expenses Net Income Weedban Greengrow $ 473,000 $ 960,000 $ $ 129,000 $ 264,000$ $ 344,000$ 696,000 $ $ 130,000 $ 42,000 $ $ 214,000 $ 654,000 $ $ $ Workings Total Weedban Greengrow 1,433,000 (43,000 units * $ 11) |(24,000 units * $ 40) 393,000 (43,000 units * $ 3) |(24,000 units * $ 11) 1,040,000 172,000 868,000 107,000 761,000