Question 3

Great Company produces and sells two products, carpet-clean and wood-polish. Revenue and cost information about the products are given below:

Carpet-clean

Wood-polish

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 for the company total $33,000 per annum. Last year the company produced and sold 15,000 units of Carpet-clean and 28,000 units of Wood-polish.

Required:

Prepare a contribution format income statement for the year, segmented by product lines. (18 marks)