Herrestad Company does produce and sell two products and the

| April 14, 2018

Herrestad Company does produce and sell two products and thedetails below will be used to prepare a segmented incomestatement (showing the income for each product and the total) forthe company. Use ABC to allocate all fixed costs to the twoproducts.Background informationTotalProd AProd BBeginning inventory0Units produced10,0002,5007,500Units sold8,0002,0006,000Selling price per unit$255480180Direct material10028040Direct labor606060Variable overhead254020Variable selling and admin. exp.10139Variable costs per unitFixed costsFixedmanufacturingoverhead200,000Fixed sellingandadministrative100,000Productionruns (not $)1006535Number ofsales reps (not$)251510Here are the first few lines of the segmented income statement tohelp you get started. Complete the statement in good format andmake sure you allocate the fixed costs to the two products. Whendone, comment on the information and the relative profitability of thetwo products.Herrestad CompanySegmented Income StatementFor the period ending Dec. 31, 2011ASalesBTotal$960,000$1,080,000$2,040,000Variable costs:Direct material560,000240,000800,000The submission should be 2 to 4 pages and need to include answers to all the questions listedabove. Show computations, discuss the results and include references in APA format.

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