Bachman Inc. produces and sells two main products. Revenue and cost information

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.

Explanation / Answer

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

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