Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Selling price per unit Variable expenses per unit Traceable fixed expenses per year Product Weedban Greengrow $ 12.00 $ 32.00 $ 2.60 $ 13.00 $ 130,000 $ 40,000 Common fixed expenses in the company total $110,000 annually. Last year the company produced and sold 43,000 units of Weedban and 19,000 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines. Product Line Total Company Weedban Greengrow Sales $ 228,000 Variable expenses 0 228,000 0 Contribution margin Traceable fixed expenses Product line segment margin Common fixed expenses not traceable to products Net operating income 0 $ 228,000 $ 0 $ 0 Sierra Company incurs the following costs to produce and sell its only product. $ Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses 11 10 4 7 $ $ 93,000 $ 305,000 During this year, 31,000 units were produced and 24,500 units were sold. The Finished Goods inventory account at the end of this year shows a balance of $162,500 for the 6,500 unsold units. Required: 1-a. Calculate this year's ending balance in Finished Goods inventory two ways-using variable costing and using absorption costing. 1-b. Does it appear that the company is using variable costing or absorption costing to assign costs to the 6,500 units in its Finished Goods inventory? 2. Assume that the company wishes to prepare this year's financial statements for its stockholders. a. Is Finished Goods inventory of $162,500 the correct amount to include on the balance sheet for external reporting purposes? b. What balance should be reported in the Finished Goods inventory account for external reporting purposes? Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,502,000 644,980 857,020 943,000 $ (85,980) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Sales Variable expenses as a percentage of sales Traceable fixed expenses East $352,000 448 $269,000 Division Central $630,000 39% $336,000 West $520,000 47% $191,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $25,000 based on the belief that it would increase that division's sales by 13%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented? 2-b. Would you recommend the increased advertising