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Royal Lawncare Company produces and sells two packaged products. Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit $ 11.00 $ 36.00 Variable expenses per unit $ 3.00 $ 14.00 Traceable fixed expenses per year $ 136.000 $ 31.000 Common fixed expenses in the company total $96.000 annually. Last year the company produced and sold 37.000 units of Weedban and 15.500 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines. Product Line Total Company Weedban Greengrow Sales Variable expenses Contribution margin Traceable fixed expenses Product line segment margin Common fixed expenses not traceable to products Net operating income

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Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Weedban:

Selling price per unit $ 11.00 (total= 37,000*11= 407,000)

Variable expenses per unit $ 3.00 (T=37,000*3= 111,000)

Traceable fixed expenses per year $ 136.000

Greengrow:

Selling price per unit $ 36.00 (T=15,500*36=558,000)

Variable expenses per unit $ 14.00 (T= 15,500*14= 161,000)

Traceable fixed expenses per year $ 31.000

Common fixed expenses in the company total $96.000 annually. Last year the company produced and sold 37.000 units of Weedban and 15.500 units of Greengrow.

Income statement:  

                                                     Weedban                      Greengrow

Sales=                                           407,000                        558,000

Variable cost=                              111,000                        161,000

Contribution margin=                  296,000                        397,000

Traceable fixed expense=          136,000                        31,000

Product line margin=                   160,000                        366,000

Total= 526,000

Common fixed expenses= 96.000

Net operating income= 430,000

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