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	$	33.00
Variable expenses per unit	$	2.60	$	10.00
Traceable fixed expenses per year	$	131,000	$	47,000

Common fixed expenses in the company total $103,000 annually. Last year the company produced and sold 38,500 units of Weedban and 23,000 units of Greengrow.

Required:

Prepare a contribution format income statement segmented by product lines.

Answer 1

CONTRIBUTION FORMATE INCOME STATEMENT
	Weedban	Greengrow
Sales Revenue	$                                   4,62,000	$                                   7,59,000
	(38,500 units X $ 12)	(23,000 units X $ 33)
Less: Variable Cost	$                                   1,00,100	$                                   2,30,000
	(38,500 units X $ 2.60)	(23,000 units X $ 10)
Contribution Margin	$                                   3,61,900	$                                   5,29,000
Less : Fixed Expenses
Traceable Fixed Expenses	$                                   1,31,000	$                                       47,000
Common Fixed Expenses	$                                       64,480	$                                       38,520
	($103,000 x 38,500/61500)	($103,000 x 23,000/61500)
Net Income	$                                   1,66,420	$                                   4,43,480