A company has two product lines, shoes and hats. Costand revenue for each line f

Question

A company has two product lines, shoes and hats. Costand revenue for each line for the current month follows:                                                                          Product lines                                                                         shoes          hats sales......................................                       $ 800,000       $450,000 variable costs as a percentage ossales........           55%            28% fixed costs traceable to productlines.........      $200,000      $ 250,000 The company incurs monthly fixed costs of $ 100,000 common toboth product lines. ** prepare the company's responsibilty income statement forthe current month. Report the repsonsiblity margin for each productline and income from operations for the company as a whole,including all dollars amounts as percentage of sales. A company has two product lines, shoes and hats. Costand revenue for each line for the current month follows:                                                                          Product lines                                                                         shoes          hats sales......................................                       $ 800,000       $450,000 variable costs as a percentage ossales........           55%            28% fixed costs traceable to productlines.........      $200,000      $ 250,000 The company incurs monthly fixed costs of $ 100,000 common toboth product lines. ** prepare the company's responsibilty income statement forthe current month. Report the repsonsiblity margin for each productline and income from operations for the company as a whole,including all dollars amounts as percentage of sales.

Explanation / Answer

Prepare the company'sresponsibilty income statement for the current month. Report therepsonsiblity margin for each product line and income fromoperations for the company as a whole, including all dollarsamounts as percentage of sales. =================================================================================
Responsibility Income Statement
For the Current Month                                 EntireCompany                     Shoes                             Hats                               Dollars      Percent            Dollar         Percent         Dollar      Percent Sales                   1,250,000        100             800,000           100          450,000         100 Variable costs       566,000          45             440,000            55          126,000          28                            _________                        _______                        ________ Contribution Margin                  684,000         55              360,000            45            324,000         72 Traceable Fixedcosts           450,000         36              200,000            25            250,000         56                         _________                     _________                     _________ Responsibility Margin                  234,000        19              160,000            20            74,000         16 Commoncosts     100,000        8                         _________ NetIncome         134,000         11                         =========

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