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Required: 1. Prepare a traditional segmented income statement, using a unit-level overhead rate based on direct labor hours. Nutterco, Inc. Traditional Income Statement Revenues
Required: 1. Prepare a traditional segmented income statement, using a unit-level overhead rate based on direct labor hours. Nutterco, Inc. Traditional Income Statement Revenues Less variable expenses: Peanut Butter 5,000,000 Cashew Butter Total 800,000 5,800,000 Direct materials 2,750,000 480,000 3,230,000 Direct labor 500,000 80,000 580,000 Variable overhead 360,000 90,000 450,000 Contribution margin 1,390,000 150,000 A 1,540,000 Less direct fixed expenses 200,000 60,000 260,000 Product margin 1,190,000 90,000 V 1,280,000 Less common fixed expenses 67,500 X Operating income 1,212,500 X Using this approach, determine whether the cashew butter product line should be kept or dropped. Kept
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