Hepras, Inc., has two product lines: routers and ethernet switches. During the c

Question

Hepras, Inc., has two product lines: routers and ethernet switches. During the current month, the two product lines reported the following results.

  

  

In addition, fixed costs common to both product lines amounted to $215,000.

Prepare an income statement showing percentages as well as dollar amounts. Conclude your statement with income from operations for the business and with the responsibility margin for each product line. (Round percentage answers to 2 decimal place. i.e. 0.1234 should be considered as 12.34%.)

Routers Switches Sales $ 670,000 $ 740,000 Variable costs (as a percentage of sales) 40 % 45 % Traceable fixed costs $ 250,000 $ 125,000

Explanation / Answer

Company Routers Switches Dollars % Dollars % Dollars % Sales 1410000 100.00% 670000 100.00% 740000 100.00% Variable costs 601000 42.62% 268000 40.00% 333000 45.00% Contribution margin 809000 57.38% 402000 60.00% 407000 55.00% Traceable fixed costs 375000 26.60% 250000 37.31% 125000 16.89% Product responsibility margin 434000 30.78% 152000 22.69% 282000 38.11% Common fixed costs 215000 15.25% Income from operations 219000 15.53%

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