FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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:
Selling price per unit
Variable expenses per unit
Traceable fixed expenses per year
Product
Weedban
$9.00
$ 2.70
$ 129,000
Greengrow
$35.00
$ 12.00
$ 44,000
Last year the company produced and sold 38,000 units of Weedban and 21,000 units of Greengrow. Its annual
common fixed expenses are $100,000.
Required:
Prepare a contribution format income statement segmented by product lines.
Total
Company
$
Product Line
0
Weedban
0 $
0
0
0
Greengrow
$
0
0
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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: Selling price per unit Variable expenses per unit Traceable fixed expenses per year Product Weedban $9.00 $ 2.70 $ 129,000 Greengrow $35.00 $ 12.00 $ 44,000 Last year the company produced and sold 38,000 units of Weedban and 21,000 units of Greengrow. Its annual common fixed expenses are $100,000. Required: Prepare a contribution format income statement segmented by product lines. Total Company $ Product Line 0 Weedban 0 $ 0 0 0 Greengrow $ 0 0
Expert Solution
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Step 1: Contribution format income statement

The contribution format income statement helps to distribute the fixed cost and variable cost. A contribution margin is the excess value of sales revenue over the variable cost. There is also an available amount to recover the fixed cost. Net operating income can be calculated by deducting the fixed cost from the contribution margin. Fixed cost can be traceable fixed cost or common fixed cost.

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