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	$	12.00	$	40.00
Variable expenses per unit	$	2.40	$	14.00
Traceable fixed expenses per year	$	133,000	$	31,000

  

Common fixed expenses in the company total $104,000 annually. Last year the company produced and sold 35,500 units of Weedban and 18,000 units of Greengrow.

  

Required:

Prepare a contribution format income statement segmented by product lines.

Answer 1

  

contribution format income statement

	Company	Weedban	Greengrow
Sales	1,146,000	35,500 x 12 = 426,000	18,000 x 40 = 720,000
Variable expenses	- 337,200	35,500 x 2.40 = - 85,200	18,000 x 14 = - 252,000
Contribution margin	808,800	340,800	468,000
Traceable fixed expenses	- 164,000	- 133,000	- 31,000
Segment margin	644,800	207,800	437,000
Common fixed expenses	- 104,000
Net operating income	540,800