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 $ 9.00 $ 39.00 Variable expenses per unit $ 2.70 $ 14.00 Traceable fixed expenses per year $ 131,000 $ 33,000 Last year the company produced and sold 40,500 units of Weedban and 18,500 units of Greengrow. Its annual common fixed expenses are $101,000. Required: Prepare a contribution format income statement segmented by product lines.

Answer 1

Royal Lawncare Company

Income Statement

Total Weedban Greengrow

Sales revenue $1,086,000 $364,500 $721,500

Variable costs $368,350 $109,350 $259,000

Contribution $717,650 $255,150 $462,500

margin

Traceable fixed $164,000 $131,00 $33,000

costs

Segment margin $553,650 $124,150 $429,500

Common fixed $101,000

costs

Net income $452,650