Segmented Income Statement

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

	Poinsettias	Fruit Trees
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.

Note: Enter all amounts as positive numbers except operating loss, if applicable.

Gorman Nurseries Inc. Segmented Income Statement For the Coming Year Poinsettias Fruit Trees Total Sales 970,000 3,100,000 4,070,000 Less variable expenses: Variable cost of goods sold 460,000 1,630,000 2,090,000 Variable selling expense 38,800 124,000 162,800 Contribution margin 471,200 1,346,000 1,817,200 Less direct fixed expenses: Direct fixed overhead 160,000 200,000 360,000 Direct selling and administrative 146,000 87,000 233,000 Segment margin 306,000 X $ 287,000 593,000 Less common fixed expenses: Common fixed overhead 800,000 Common selling and administrative 450,000 Operating Loss -25,800