Caltec. Inc., produces and sells recordable CD and DVD packs. Revenue and cost i

Question

Caltec. Inc., produces and sells recordable CD and DVD packs. Revenue and cost information relating lo the products follow: Selling price per pack $ 8.00 $ 40.00 Variable expenses per pack $ 2.70 $ 10.00 Traceable fixed expenses per year $ 133,000 $ 33,000 Common fixed expenses in the company total $97,000 annually. Last year the company produced and sold 44.000 CD packs and 17,500 DVD packs. Prepare a contribution format income statement for the year segmented by product lines. (Input all amounts as positive values except tosses which should be indicated by a minus sign.)

Explanation / Answer

The contribution format income statement is given below:

Product Total CD DVD Sales 1,052,000 352,000 (44,000*8) 700,000 (17,500*40) Variable Expenses 293,800 118,800 (44,000*2.70) 175,000 (17,500*10) Contribution Margin 758,200 233,200 525,000 Traceable Fixed Expenses 166,000 133,000 33,000 Product Line Segment Margin 592,200 100,200 492,000 Common Fixed Expenses Not Traceable to Products 97,000 Net Operating Income $495,200

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