Royal Lawncare Company produces and sells two packaged products, Weedban and Gre
ID: 2464030 • Letter: R
Question
Royal Lawncare Company produces and sells two packaged products, Weedban and Greengrow.
Revenue and cost information relating to the products follow:
Product
Weedban Greengrow
Selling price per unit . . . . . . . . . . . . . . . . . . . . . . $6.00 $7.50
Variable expenses per unit . . . . . . . . . . . . . . . . . $2.40 $5.25
Traceable fixed expenses per year . . . . . . . . . . . $45,000 $21,000
Common fixed expenses in the company total $33,000 annually. Last year the company produced
and sold 15,000 units of Weedban and 28,000 units of Greengrow.
Required:
Prepare a contribution format income statement segmented by product lines.
Explanation / Answer
Solution:
Contribution Format Income Statement segmented by product
Particulars
Weedban
(15,000 Units Sold)
Greengrow
(28,000 Units Sold)
Total
$ per unit
Amount
$ per unit
Amount
Revenue
$6.00
$90,000
$7.50
$210,000
$300,000
Variable Expenses
$2.40
$36,000
$5.25
$147,000
$183,000
Contribution Margin
(Revenue - Variable Expenses)
$3.60
$54,000
$2.25
$63,000
$117,000
Fixed Cost
$3.00
$45,000
0.75
$21,000
$66,000
Operating Profit / (Loss)
(Contribution Margin - Fixed Cost)
$0.60
$9,000
$1.50
$42,000
$51,000
Thank you and happy to help you
Contribution Format Income Statement segmented by product
Particulars
Weedban
(15,000 Units Sold)
Greengrow
(28,000 Units Sold)
Total
$ per unit
Amount
$ per unit
Amount
Revenue
$6.00
$90,000
$7.50
$210,000
$300,000
Variable Expenses
$2.40
$36,000
$5.25
$147,000
$183,000
Contribution Margin
(Revenue - Variable Expenses)
$3.60
$54,000
$2.25
$63,000
$117,000
Fixed Cost
$3.00
$45,000
0.75
$21,000
$66,000
Operating Profit / (Loss)
(Contribution Margin - Fixed Cost)
$0.60
$9,000
$1.50
$42,000
$51,000
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