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 | $ | 37.00 |
| Variable expenses per unit | $ | 2.70 | $ | 14.00 |
| Traceable fixed expenses per year | $ | 130,000 | $ | 33,000 |
Last year the company produced and sold 41,000 units of Weedban and 22,500 units of Greengrow. Its annual common fixed expenses are $108,000.
Required:
Prepare a contribution format income statement segmented by product lines.
| Royal Lawncare Company | |||
| Contribution Format Income Statement | |||
| Particulars | Total | Weedban | Greengrow |
| Number of Units | 12 | 37 | |
| Selling Price | 41,000 | 22,500 | |
| Sales (Unit*Selling Price) | 13,24,500 | 4,92,000 | 8,32,500 |
| Variable Expense (Unit* VC per unit) | 4,25,700 | 1,10,700 | 3,15,000 |
| Contribution Margin | 8,98,800 | 3,81,300 | 5,17,500 |
| Traceable Fixed Expense | 1,63,000 | 1,30,000 | 33,000 |
| Profit before common fixed expense | 7,35,800 | 2,51,300 | 4,84,500 |
| Common Fixed Expense | 1,08,000 | 69,732 | 38,268 |
| Net Operating Income(Loss) | 6,27,800 | 1,81,568 | 4,46,232 |
| Allocation of Common Fixed Expense | |||
| Weedban = 1,08,000*(41000/63500) | 69,732 | ||
| Greengrow = 1,08,000*(22500/63500) | 38,268 | ||
| Total | 1,08,000 |
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