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Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to...

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Accounting

Royal Lawncare Company produces and sells two packagedproducts—Weedban and Greengrow. Revenue and cost informationrelating to the products follow:

Product

WeedbanGreengrow
Selling price per unit$11.00$39.00
Variable expenses per unit$2.40$14.00
Traceable fixed expenses per year$129,000$39,000

Common fixed expenses in the company total $111,000 annually.Last year the company produced and sold 39,000 units of Weedban and17,500 units of Greengrow.

Required:

Prepare a contribution format income statement segmented byproduct lines.

Answer & Explanation Solved by verified expert
3.8 Ratings (506 Votes)

Contribution Format Income Statement
Total Weedban Greengrow
Sales      1,111,500.00 429,000.00    682,500.00
Less: Variable expenses         338,600.00    93,600.00    245,000.00
Contribution margin         772,900.00 335,400.00    437,500.00
Less: Traceable fixed expenses         168,000.00 129,000.00      39,000.00
Product line segment margin         604,900.00 206,400.00    398,500.00
Less: Common fixed expenses
not traceable to products         111,000.00
Net operating income         493,900.00
Explanation
1 Sales:
Weedban: 39,000 units × $11.00 per unit = $429,000
Greengrow: 17,500 units × $39.00 per unit = $682,500
2 Variable expenses:
Weedban: 39,000 units × $2.40 per unit = $93,600
Greengrow: 17,500 units × $14.00 per unit = $245,000

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