Royal Lawncare Company produces and sells two packaged products—Weedban and Gree

Question

Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow:

Product

Common fixed expenses in the company total $97,000 annually. Last year the company produced and sold 41,000 units of Weedban and 18,500 units of Greengrow.

Required:

Prepare a contribution format income statement segmented by product lines.

Product

Weedban Greengrow Selling price per unit $ 12.00 $ 31.00 Variable expenses per unit $ 3.00 $ 12.00 Traceable fixed expenses per year $ 134,000 $ 45,000

Explanation / Answer

492000

(41000*12)

573500

(18500*31)

123000

(41000*3)

222000

(18500*12)

Total weedban Greengrow Sales 1065500

492000

(41000*12)

573500

(18500*31)

Variable expenses 345000

123000

(41000*3)

222000

(18500*12)

Contribution margin 720500 369000 351500 Traceable fixed expenses 179000 134000 45000 Product line segment margin 541500 Common fixed expenses not Traceable to product 97000 Net operating income 444500

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