Worksheet. Poleski’s controller would like to have the worksheet display an inco

Question

Worksheet. Poleski’s controller would like to have the worksheet display an income statement in a contribution margin format (sales-variable costs = contribution margin- fixed costs = net income).

Data Section Fixed Variable Production costs      Direct materials $2.30      Direct labor 4.70      Factory overhead $225,000 3.00 Selling expenses      Sales salaries & commissions 97,000 0.75      Advertising 47,500      Miscellaneous selling expense 16,200 General expenses      Office salaries 92,000      Supplies 12,300 0.25      Miscellaneous general expense 15,000 $662,500 $12.50 Projected unit sales 156,000 Selling price per unit $18.50 Target net income $250,000 Answer Section Contribution margin per unit $6.00 Contribution margin ratio 32.43% Break-even point in units 110,417 Units needed to achieve target net income 152,083 Break-even point in dollars $2,042,708 Sales dollars needed to achieve target net income $2,813,542 Net income based on projected unit sales (cell C22) $273,500

Explanation / Answer

worksheet displaying the income statement in a contribution margin format Projected Sales Units 156000 Selling Price Per Unit $18.50 Less Variable Cost DM $2.30 DL $4.70 Factory OH $3.00 Sales Salaries and Commissions $0.75 Supplies $0.25 Total Variable Cost $11.00 Total Variable cost as projected -Given $12.50 Contribution Margin Per Unit $6.00 Total Contribution Total Units * Cont/Unit 156000*$6.00 $936,000 Less Fixed Costs Factory OH $225,000 Sales salaries and Commission $97,000 Advertising $47,500 Misc Selling Expenses $16,200 Office Salaries $92,000 Supplies $12,300 Misc General exp $15,000 $505,000 Projected as shown in the sum given $662,500 Net Income $273,500

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