Honeyville Hardware produces and sells two products for professional landscapers

Question

Honeyville Hardware produces and sells two products for professional landscapers: shovels and rakes. Revenue and cost information relating to the products follow: Product ShovelsRakes $10.00 $21.00 6.50 12.00 8,000 25,000 Selling price per unit Variable expenses per unit Traceable fixed expenses per year Common fixed expenses in the company total $15,000 annually. Last year the company produced and sold 3,500 shovels and 5,000 rakes. Required: Prepare a contribution format income statement for the vear, segmented bv product lines Total Shovels Rakes

Explanation / Answer

ANSWER:

Total Shovels Rakes Sales 140,000 35,000 105,000 Variable expenses 82,750 22,750 60,000 Contribution margin 57,250 12,250 45,000 Traceable fixed expenses 33,000 8,000 25,000 Product line segment margin 24,250 4,250 20,000 Common fixed expenses not traceable to products 15,000 Operating income 9,250

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