Question

Bachman Inc. produces and sells two main products. Revenue and cost information relating to the products are as follows:

                                                                                         Product

                                                                        Turner                        Overdrive

Selling price per unit                                      $    10.00                     $ 27.00

Variable expenses per unit                                      4.30                         19.00

Traceable fixed expenses per year                  $142,000                     $54,000

Common fixed expenses in the company total $125,000 per year. Last year, Bachman Inc. produced and sold 42,500 units of Turner and 19,000 units of Overdrive.

Required:

Prepare a contribution format income statement for the year segmented by product lines. Your income statement will show the segment margin for each product and the net income for the company as a whole.

Answer 1

Answer:-

Contribution format income statement
Particulars	Turner	Overdrive	Total
	$	$	$
Sales	42500 units*$10 per unit =425000	19000 units*$27 per unit =513000	938000
Less:- Variable cost	42500 units*$4.30 per unit =182750	19000 units*$19 per unit =361000	543750
Contribution margin	242250	152000	394250
Less:-Traceble fixed expenses	142000	54000	196000
Segment margin	100250	98000	198250
Less:-Common fixed expenses			125000
Net opreating income			73250