Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Selling price per unit Variable expenses per unit Traceable fixed expenses per year %24 24 $ 130,000 Greengrow 24 %24 $ 34,000 8.00 38.00 2.50 13.00 Last year the company produced and sold 37,000 units of Weedban and 17,000 units of Greengrow. Its annual common fixed expenses are $101,000. Required: Prepare a contribution format income statement segmented by product lines. Product Line Total Weedban Greengrow Company
Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Selling price per unit Variable expenses per unit Traceable fixed expenses per year %24 24 $ 130,000 Greengrow 24 %24 $ 34,000 8.00 38.00 2.50 13.00 Last year the company produced and sold 37,000 units of Weedban and 17,000 units of Greengrow. Its annual common fixed expenses are $101,000. Required: Prepare a contribution format income statement segmented by product lines. Product Line Total Weedban Greengrow Company
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter2: Basic Managerial Accounting Concepts
Section: Chapter Questions
Problem 4MCQ
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Transcribed Image Text:Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information
relating to the products follow:
Product
Weedban
Selling price per unit
Variable expenses per unit
Traceable fixed expenses per year
%24
%24
2.50
$ 130,000
Greengrow
2$
$ 13.00
$ 34,000
8.00
38.00
Last year the company produced and sold 37,000 units of Weedban and 17,000 units of Greengrow. Its annual common fixed expenses
are $101,000.
Required:
Prepare a contribution format income statement segmented by product lines.
Product Line
Total
Weedban
Greengrow
Company
Expert Solution
Step 1
In a contribution margin income statement, common costs are allocated to various divisions on the basis of sales ratio.
Sales in Weedban = 37000*8 = $296,000
Sales in Greengrow = 17000*38 = $646000
Total Sales = 296000 + 646000 = $942,000
Common costs allocated to Weedban = 101,000 * 296000/942000 = $31737
Common costs allocated to Greengrow = 101,000 * 646000/942000 = $69,263
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