Royal Lawncare Company produces and sells two packaged products—Weedban and Gree
ID: 2590489 • 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
Common fixed expenses in the company total $103,000 annually. Last year the company produced and sold 35,500 units of Weedban and 21,500 units of Greengrow.
Required:
Prepare a contribution format income statement segmented by product lines.
Product
Weedban Greengrow Selling price per unit $ 12.00 $ 37.00 Variable expenses per unit $ 2.70 $ 13.00 Traceable fixed expenses per year $ 138,000 $ 48,000Explanation / Answer
Product Line Total Company Weedban Greengrow Sales(35,500 units × $12.00 per unit);(21,500 units × $37.00 per unit) $1,221,500 $426,000 $795,500 Variable expenses(35,500 units × $2.70 per unit);(21,500 units × $13.00 per unit) $375,350 $95,850 $279,500 Contribution margin $846,150 $330,150 $516,000 Traceable fixed expenses $186,000 $138,000 $48,000 Product line segment margin $660,150 $192,150 $468,000 Common fixed expenses not traceable to products $103,000 Net operating income $557,150
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