Exercise 5-4 Basic Segmented Income Statement LO5-4] Royal Lawncare Company prod

Question

Exercise 5-4 Basic Segmented Income Statement LO5-4] Royal Lawncare Company produces and sells two packaged products, Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Selling price per unit Variable expenses per unit Traceable fixed expenses per year weedban Greengrow $11.00 34.00 2.40 14.00 $ 138,000 44,000 Common fixed expenses in the company total $102,000 annually. Last year the company produced and sold 35,500 units of Weedban and 19,000 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines. Product Line Total Co Weedban Greengrow

Explanation / Answer

WEEDBAN SALES = 35500*$11 =$390,500

GREEN GROW SALES = 19000*$34 = $646,000

WEEDBAN VARIABLE EXPENSES = 35500*$2.4 = $85,200

GREENGROW VARIABLE EXPENSES = 19000*$14 =$266,000

TOTALCOMPANY WEEDBAN GREEN GROW SALES $1,036,500 $390,500 $646,000 VARIABLE EXPENSES ($351,200) ($85,200) ($266,000) CONTRIBUTION MARGIN $685,300 $305,300 $380,000 TRACEABLE FIXED EXPENSES ($182,000) ($138,000) ($44,000) SEGMENT MARGIN $503,300 $167,300 $336,000 COMMON FIXED EXPENSES ($102,000) ------- ------- NET OPERATING INCOME $401,300

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