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 | $ | 12.00 | $ | 30.00 |
| Variable expenses per unit | $ | 2.50 | $ | 12.00 |
| Traceable fixed expenses per year | $ | 137,000 | $ | 36,000 |
Last year the company produced and sold 37,000 units of Weedban and 16,000 units of Greengrow. Its annual common fixed expenses are $105,000.
Required:
Prepare a contribution format income statement segmented by product lines.
| Answer | ||||
| Particulars | Weedban | Greengrow | Total | |
| a. | Sales | $ 4,44,000 | $ 4,80,000 | $9,24,000 |
| (12*37000) | (30*16000) | |||
| b. | Less: Variable Expenses | $ 92,500 | $ 1,92,000 | $2,84,500 |
| (2.5 * 37000) | (12 * 16000) | |||
| c. | Contribution Margin (a-b) | $ 3,51,500 | $ 2,88,000 | $6,39,500 |
| d. | Less: Traceable Fixed Expenses per year | $ 1,37,000 | $ 36,000 | $1,73,000 |
| e. | Segment Margin (c-d) | $ 2,14,500 | $ 2,52,000 | $4,66,500 |
| f. | Less: Annual common fixed expenses | $1,05,000 | ||
| g. | Net Operating Income (e-f) | $3,61,500 |
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