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.

A sales commission of 4% of sales is paid for each of the two product lines. Direct ﬁxed sell-

ing 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.

Requuired:

Prepare a segmented income statement for Gorman Nurseries for the coming year, using vari-

able costing.

		Gorman Nurseries Inc.
		Segmented Income Statement

			Poinsettias	Fruit Trees	Total
Sales			$ 960,000	$ 3,100,000	?
Variable cost of goods sold	$ (460,000)	$ (1,600)	?
Variable selling expense*		?	?	?
Contribution margin		?	?	?
Less direct ﬁxed expenses:
Direct ﬁxed overhead		$ (160,000)	$ (200,000)	$ (360,000)
Direct selling and administrative	?	?	?
Segment margin		?	?	?
Less common ﬁxed expenses:
Common ﬁxed overhead				?
Common selling and administrative			?
Operating income				?