Mixers, Inc., produces two products: soda water and seltzer juice. Cost and revenue data for each product line for the current month are as follows:

In addition, fixed costs that are common to both product lines amount to $75,000.

Instructions
a. Prepare Mixers, Inc.’s responsibility income statement for the current month. Report the responsibility margin for each product line and income from operations for the company as a whole. Also include columns showing all dollar amounts as percentages of sales.
b. According to the analysis performed in part a, which product line is more profitable? Should the common fixed costs be considered when determining the profitability of individual product lines? Why or why not?
c. Mixers, Inc., has $15,000 to be used in advertising for one of the two product lines and expects that this expenditure will result in additional sales of $50,000. How should the company decide which product line toadvertise?

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Product Lines Soda Water Seltzer Juice Sales Contribution margin as a percentage of sales Fixed costs traceable to product lines :.. $750,000 35% $175,000 $970,000 60% $150,000