Homework SourseBachman Inc produces and sells two main products Revenue and
Bachman Inc. produces and sells two main products. Revenue and cost information relating to the products are as follows:
Product
Turner Overdrive
Selling price per unit $ 10.00 $ 27.00
Variable expenses per unit 4.30 19.00
Traceable fixed expenses per year $142,000 $54,000
Common fixed expenses in the company total $125,000 per year. Last year, Bachman Inc. produced and sold 42,500 units of Turner and 19,000 units of Overdrive.
Required:
Prepare a contribution format income statement for the year segmented by product lines. Your income statement will show the segment margin for each product and the net income for the company as a whole.
Solution
Answer:-
| Contribution format income statement | |||
| Particulars | Turner | Overdrive | Total |
| $ | $ | $ | |
| Sales | 42500 units*$10 per unit =425000 | 19000 units*$27 per unit =513000 | 938000 |
| Less:- Variable cost | 42500 units*$4.30 per unit =182750 | 19000 units*$19 per unit =361000 | 543750 |
| Contribution margin | 242250 | 152000 | 394250 |
| Less:-Traceble fixed expenses | 142000 | 54000 | 196000 |
| Segment margin | 100250 | 98000 | 198250 |
| Less:-Common fixed expenses | 125000 | ||
| Net opreating income | 73250 |
