Question

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	$	8.00	$	38.00
Variable expenses per unit	$	2.40	$	11.00
Traceable fixed expenses per year	$	137,000	$	48,000

Common fixed expenses in the company total $102,000 annually. Last year the company produced and sold 37,500 units of Weedban and 16,000 units of Greengrow.

Required:

Prepare a contribution format income statement segmented by product lines.

Answer 1

	Total	Weedban	Green grow
Sales	908,000	(37500*8) = 300,000	(16000*38) = 608,000
Variable cost	266,000	(37500*2.40)= 90,000	(16000*11) = 176,000
Contribution margin	642,000	210,000	432,000
Traceable fixed expenses	185,000	137,000	48,000
Segment margin	457,000	73,000	384,000
Common fixed costs	102,000
Net operating income	355,000