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	$	32.00
Variable expenses per unit	$	2.30	$	13.00
Traceable fixed expenses per year	$	130,000	$	48,000

Common fixed expenses in the company total $113,000 annually. Last year the company produced and sold 39,000 units of Weedban and 22,000 units of Greengrow.

Required:

Prepare a contribution format income statement segmented by product lines.

Product Line Total Company Weedban Greengrow

Sales $1,094,000 $390,000 $704,000

Variable expenses 375,70089 ________________ 286000

Traceable fixed income _____________ ______________ ______________

Contribution margin 718,300 300, 300    418,000

Traceable fixed expenses _________________ ______________________ ______________

7Product line segment margin7 718,300 $300,300 $418,000

Common fixed expenses not traceable to products __________________ ____________________ ______________

Net operating income $718,300 _____________________ __________________

Answer 1

			total	Weedban	Greengrow
			company
Sales			1,094,000	390,000	704,000
less variable cost			375,700	89,700	286,000
contribution margin			718,300	300,300	418,000
Traceable fixed expense			178,000	130,000	48,000
segment margin			540,300	170,300	370,000
common fixed cost			113,000
net income (loss)			427,300