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	$	9.00	$	37.00
Variable expenses per unit	$	2.80	$	12.00
Traceable fixed expenses per year	$	129,000	$	32,000

Last year the company produced and sold 39,000 units of Weedban and 23,000 units of Greengrow. Its annual common fixed expenses are $113,000.

Required:

Prepare a contribution format income statement segmented by product lines.

Answer 1

contribution format income statement

	Company	Weedban	Greengrow
Sales	1,202,000	39,000 x 9 = 351,000	23,000 x 37 = 851,000
Variable expenses	- 385,200	39,000 x 2.80 = - 109,200	23,000 x 12 = - 276,000
Contribution margin	816,800	241,800	575,000
Traceable fixed expenses	- 161,000	- 129,000	- 32,000
Segment margin	655,800	112,800	543,000
Common fixed expenses	- 113,000
Net operating income	542,800