Garringer Company makes two products, regulars and seasonals. Information on costs associated with each product line...

  

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Garringer Company makes two products, regulars and seasonals. Information on costs associated with each product line is as follows: Regulars $135,000 50.000 $ 85,000 Sales revenue Less: Variable expenses Contribution margin Less: Direct fixed expenses Common fixed expenses Operating income 3,000 54,000 $ 28,000 Seasonals $15,000 8,600 $ 6,400 1,200 6,000 $ (800) The direct fixed expenses are advertising and selling costs that are incurred by the particular product line. The common fixed expenses are allocated to the two product lines on the basis of sales revenue. Total common fixed expenses would not change if a product line were dropped. Required 1. Develop a segmented income statement, by product and in total for Garringer Company. Be sure to show the segment margin for each product. 2. By how much would operating income increase or decrease if the seasonals were dropped? Garringer Company makes two products, regulars and seasonals. Information on costs associated with each product line is as follows: Regulars $135,000 50.000 $ 85,000 Sales revenue Less: Variable expenses Contribution margin Less: Direct fixed expenses Common fixed expenses Operating income 3,000 54,000 $ 28,000 Seasonals $15,000 8,600 $ 6,400 1,200 6,000 $ (800) The direct fixed expenses are advertising and selling costs that are incurred by the particular product line. The common fixed expenses are allocated to the two product lines on the basis of sales revenue. Total common fixed expenses would not change if a product line were dropped. Required 1. Develop a segmented income statement, by product and in total for Garringer Company. Be sure to show the segment margin for each product. 2. By how much would operating income increase or decrease if the seasonals were dropped?

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