Question

Gorman Nurseries Inc. grows poinsettias and fruit trees in a green house/nursery operation. The following information was provided for the coming year. Poinsettias Fruit Trees Sales $ 970,000 $ 3,100,000 Variable cost of goods sold 460,000 1,630,000 Direct fixed overhead 160,000 200,000 A sales commission of 4% of sales is paid for each of the two product lines. Direct fixed selling and administrative expense was estimated to be $146,000 for the poinsettia line and $87,000 for the fruit tree line. Common fixed overhead for the nursery operation was estimated to be $800,000; common selling and administrative expense was estimated to be $450,000. Required: Prepare a segmented income statement for Gorman Nurseries for the coming year, using variable costing. X Labels and Amount Descriptions Refer to the list below for the exact wording of a label or an amount description within your income statement. Labels Add common fixed expenses Add direct fixed expenses Add variable expenses Less common fixed expenses Less direct fixed expenses Less variable expenses Amount Descriptions Common fixed overhead Common selling and administrative Contribution margin Direct fixed overhead Direct selling and administrative Operating loss Operating income Sales Segment margin Variable cost of goods sold Variable selling expense X Segmented Income Statement Shaded cells have feedback. Prepare a segmented income statement for Gorman Nurseries for the coming year, using variable costing. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement. If an amount is negative, first enter a minus sign (-). Score: 26/159 Gorman Nurseries Inc. Segmented Income Statement For the Coming Year 1 Poinsettias Fruit Trees Total 2 Sales ✔ $970,000.00 ✔ $3,100,000.00 ✔ $4,070,000.00 ✔ 3 Less variable expenses: ✔ 4 Variable cost of goods sold ✔ 460,000.00 5 6 7 (Label) 8 9 10 11 (Label) 12 13 14 Points: 6.05 / 37 Feedback Check My Work See Cornerstone 8-5.

Answer 1

Answer:

Gorman Nurseries Inc.
Segmented Income Statement
For the Coming Year
Amount Descriptions	Poinsettias	Fruit Trees	Total
Sales	970000	3100000	4070000
Less variable expenses
Variable cost of goods sold	-460,000	-1,630,000	-2090000
Variable selling expense	-38800	-124000	-162800
Contribution margin	471,200	1,346,000	1,817,200
Less direct fixed expenses
Direct fixed overhead	-160,000	-200,000	-360000
Direct selling and administrative	-146000	-87000	-233000
Segment margin	165,200	1,059,000	1,224,200
Less common fixed expenses
Common fixed overhead			-800000
Common selling and administrative			-450000
Operating loss			-25,800

Working notes for the above answer