Gorman Nurseries Inc. grows poinsettias and fruit trees in a green house/nursery operation. The following information was provided for the coming year.
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
2
3
4
5
6
7
8
9
10
11
12
13
14
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