Question

Exercise 6-4 (Algo) Basic Segmented Income Statement [LO6-4]

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	$	11.00	$	33.00
Variable expenses per unit	$	2.20	$	11.00
Traceable fixed expenses per year	$	134,000	$	40,000

Last year the company produced and sold 35,500 units of Weedban and 21,000 units of Greengrow. Its annual common fixed expenses are $98,000.

Required:

Prepare a contribution format income statement segmented by product lines.

Answer 1

	Total	Weedban	Greengrow
Sales	1083500	390500	693000
Variable expenses	309100	78100	231000
Contribution margin	774400	312400	462000
Traceable fixed expenses	174000	134000	40000
Product line segment margin	600400	178400	422000
Common fixed expenses not traceable to products	98000
Net operating income	502400

Workings:
	Weedban	Greengrow
Sales	=35500*11	=21000*33
Variable expenses	=35500*2.20	=21000*11