Royal Lawncare Company produces and sells two packaged products, Weedban and Gre

Question

Royal Lawncare Company produces and sells two packaged products, Weedban and Greengrow. Revenue and cost information relating to the products follow: Weedban Greengrow Selling price per unit 8.00 34.00 Variable expenses per unit $2.70 $13.00 Traceable fixed expenses per year $ 138,000 $ 40,000 Common fixed expenses in the company total $112,000 annually. Last year the company produced and sold 44,000 units of Weedban and 18,000 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines.

Explanation / Answer

Solution.

Contribution format income statement segmented by product lilnes.

Assumption : As information related to common expenses not given it is equally distributed in both products which is excess {112,000 - (138,000+40,000)} i.e. = 66,000 equally distributed in both department $33,000 and $33,000

Particular Weedban in $ Greengrow in $ Sales 352,000 (44,000X8) 612,000 (18,000X34) Less: Variable espenses 118,800 (44,000X2.70) 234,000 (18,000X130 Contribution 234,000 378,000 Less : Fixed expenses (138,000) (40,000) Less : Common Fixed expenses (33,000) (33,000) Net income 63,000 305,000

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