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	$	10.00	$	33.00
Variable expenses per unit	$	2.70	$	12.00
Traceable fixed expenses per year	$	138,000	$	41,000

Common fixed expenses in the company total $99,000 annually. Last year the company produced and sold 38,000 units of Weedban and 19,500 units of Greengrow.

Required:

Prepare a contribution format income statement segmented by product lines.

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	$	10.00	$	33.00
Variable expenses per unit	$	2.70	$	12.00
Traceable fixed expenses per year	$	138,000	$	41,000

Common fixed expenses in the company total $99,000 annually. Last year the company produced and sold 38,000 units of Weedban and 19,500 units of Greengrow.

Required:

Prepare a contribution format income statement segmented by product lines.

Answer 1

	Total	Weedban	Greengrow
Sales	$               1,023,500	$                  380,000	$                   643,500
Variable Expenses	336,600	102,600	234,000
Contribution Margin	686,900	277,400	409,500
Traceable Fixed Expenses	179,000	138,000	41,000
Product Line Segment Margin	507,900	139,400	368,500
Untraceable Common Fixed Expenses	99,000
Net Operating Income	$                  408,900

Sales:

Weedban = $10 per unit x 38,000 units = $380,000

Greengrow = $33 per unit x 19,500 units = $643,500

Variable Expenses:

Weedban = $2.70 x 38,000 units = $102,600

Greengrow = $12 x 19,500 units = $234,000