Seclusion Inc. Produces and sells recordable CD and DVD packs. Revenue and cost

Question

Seclusion Inc. Produces and sells recordable CD and DVD packs. Revenue and cost information relating to the products follow :

CD

DVD

Selling price per pack

$               8.00

$          20.00

variable expenses per pack

$               3.20

$          10.50

traceable fixed expenses per year

$ 138,000.00

$ 45,000.00

Common fixed expenses in the company total $105,000 annually. Last year the company produced and sold 37,500 CD’s and 18,000 DVD packs.

Required

Prepare a contribution format income statement for the year, segmented by product lines.

CD

DVD

Selling price per pack

$               8.00

$          20.00

variable expenses per pack

$               3.20

$          10.50

traceable fixed expenses per year

$ 138,000.00

$ 45,000.00

Explanation / Answer

Contribution Income Statement Particulars CD` DVD Common Sales $300,000 $360,000 $660,000 Less Variable cost ($120,000) ($189,000) ($309,000) Contribution Margin $180,000 $171,000 $351,000 Less Traceable Fixed Cost ($138,000) ($45,000) ($183,000) Less Common fixed exp 0 0 ($105,000) NET INCOME $63,000

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