https://file.aiquickdraw.com/mathbot/file/1728871567242gfcw2v4e.jpg

Let's break down the tasks from the image you provided:

### 1. **Absorption Costing:**
   Using absorption costing, you need to calculate the **cost of goods sold per unit** and prepare a **traditional format income statement**. The costs involved include:
   - Direct materials
   - Direct labor
   - Variable manufacturing overhead
   - Fixed manufacturing overhead

   **Steps to follow:**
   - Add up all the costs to get the **total absorption costing per unit**.
   - Use this information to compute the **cost of goods sold** for the total units produced.
   - Prepare a traditional format income statement by filling in the sales, cost of goods sold, gross margin, and selling & administrative expenses.

### 2. **Segmented Income Statement:**
   Grass King Company produces and sells two mowers: **Slow-Mow** and **Kwik-Kut**. You are required to prepare a **contribution format income statement** segmented by product lines. 

   **Revenue and cost information:**
   - Selling price per unit: $375 (Slow-Mow), $250 (Kwik-Kut)
   - Variable expenses per unit: $105 (Slow-Mow), $150 (Kwik-Kut)
   - Traceable fixed expenses per year: $20,000 (Slow-Mow), $25,000 (Kwik-Kut)

   **Additional information:**
   - Common fixed expenses: $15,000 annually
   - Units produced and sold: 1,000 (Slow-Mow), 600 (Kwik-Kut)

   **Steps:**
   - Calculate the **contribution margin** for each product (Sales - Variable Expenses).
   - Subtract the **traceable fixed expenses** to get the **product line segment margin**.
   - Allocate **common fixed expenses** and calculate the **net operating income** for the company.

Would you like to start with the absorption costing calculation or the contribution format income statement? Let me know if you need further clarifications.

Here are 5 questions related to this content:
1. What are the benefits of using absorption costing compared to variable costing?
2. How do fixed overhead costs impact the cost of goods sold in absorption costing?
3. What is the difference between traceable and common fixed expenses in segmented income statements?
4. How do you allocate common fixed expenses when preparing a segmented income statement?
5. What are the advantages of contribution margin analysis in decision-making?

**Tip:** When preparing segmented income statements, it's important to keep common fixed expenses separate, as they are not traceable to individual products.

Using absorption costing, calculate the cost of goods sold per unit and then prepare a traditional format income statement for Pin-Point Company. Additionally, prepare a contribution format income statement segmented by product lines for Grass King Company, using data related to two products: Slow-Mow and Kwik-Kut.

Learn how to calculate the cost of goods sold using absorption costing and prepare traditional and contribution format income statements for Pin-Point Company and Grass King Company. This problem explores cost accounting concepts, including the contribution margin approach and fixed versus variable expenses.

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