Gorman Nurseries Inc. grows poinsettias and fruit trees in a green house/nursery operation. The following information was provided for the coming year.

Sales	$ 970,000	$ 3,100,000
Variable cost of goods sold	460,000	1,630,000
Direct fixed overhead	160,000	200,000

A sales commission of 4% of sales is paid for each of the two product lines. Direct fixed selling and administrative expense was estimated to be $146,000 for the poinsettia line and $87,000 for the fruit tree line. Common fixed overhead for the nursery operation was estimated to be $800,000; common selling and administrative expense was estimated to be $450,000.

Required:

Prepare a segmented income statement for Gorman Nurseries for the coming year, using variable costing.

Labels and Amount Descriptions Refer to the list below for the exact wording of a label or an amount description within your income statement.

Labels

Add common fixed expenses

Add direct fixed expenses

Add variable expenses

Less common fixed expenses

Less direct fixed expenses

Less variable expenses

Amount Descriptions

Common fixed overhead

Common selling and administrative

Contribution margin

Direct fixed overhead

Direct selling and administrative

Operating loss

Operating income

Sales

Segment margin

Variable cost of goods sold

Variable selling expense

Segmented Income Statement

Prepare a segmented income statement for Gorman Nurseries for the coming year, using variable costing. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement. If an amount is negative, first enter a minus sign (-).

Gorman Nurseries Inc.

Segmented Income Statement

For the Coming Year

1		Poinsettias	Fruit Trees	Total
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