Royal Lawncare Company produces and sells two packaged products, Weedban and Gre
ID: 2464029 • Letter: R
Question
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 . . . . . . . . . . . . . . . . . . . . . . $6.00 $7.50
Variable expenses per unit . . . . . . . . . . . . . . . . . $2.40 $5.25
Traceable fixed expenses per year . . . . . . . . . . . $45,000 $21,000
Common fixed expenses in the company total $33,000 annually. Last year the company produced
and sold 15,000 units of Weedban and 28,000 units of Greengrow.
Required:
Prepare a contribution format income statement segmented by product lines.
Explanation / Answer
Contribution Format Income Statement Segmented by Product lines
Total Weedban Greenglow
Sales $ 300,000 $ 90,000 $ 210,000
Variable Expenses $ 183,000 $ 36,000 $ 147,000
Contribution margin $ 117,000 $ 54,000 $ 63,000
Traceable fixed
Expenses $ 66,000 $ 45,000 $21,000
Product line segment
Margin $ 51,000 $ 9,000 $ 42,000
Common fixed expenses $ 33,000
Net operating Income $ 18,000
Working notes:
Sales :
Weedban: 150,000 units x $ 6.00 per unit = $90,000
Greenglow: 28,000 units x $ 7.50 per unit = $ 210,000
Variable Expenses:
Weedban: 150,000 units x $ 2.40 per unit = $36,000
Greenglow: 28,000 units x $ 5.25 per unit = $ 147,00
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