Shown here is an income statement in the traditional format for a firm with a sa
ID: 2500494 • Letter: S
Question
Shown here is an income statement in the traditional format for a firm with a sales volume of 7,600 units. Cost formulas also are shown S 34,900 21,000 S 13,900 1,930 Cost of goods sold ($5,800+ $2/unit) Gross profit Operating expenses: Selling ($1,170+$0.1/unit) Administration ($3,850+$0.2/unit) 5,370 Operating income S 6,600 Required . Prepare an income statement in the contribution margin format Contribution Margin Income Statement $ 34,900 Variable expenses Cost of goods sold 15,200 1,520 16,720 Total variable expenses Contribution margin Fixed expenses Cost of goods sold Selling expenses 18,180 5,800 1.170 3,850 Total fixed expenses Operating income 10,820 7.360
Explanation / Answer
Answer b) As the contribution margin inome statement is provided in (a) above contibution margin per unit would be
Total contribution /no of units= 18180/7600 =2.40 per unit
Answer c1) Firms operating income when volume is changed from 7600 units to 11400 units( as per contribution margin format), Fisrt question is solved by providing format .
Answer c2) firms operating income when volume is changed from 7600 to 3800 units( As per contibution margin format) operating loss is $(1730)
Answer d1) when the revenue increases from $34900 by $13500 the actual revenue come to $48400 and operating income is $20860
Answer d2) when the revenue decreases from $34900 by $2500 the actual revenue comes to $32400 and operating income is $ 4860
Revenue(11400 units)(A) 52350 Variable expenses cost of goods sold(11400*2) 22800 Administrative expenses(11400*0.2) 2280 Total variable expenses (B) 25080 Contribution margin (A-B) 27270 Fixed expenses COGS 5800 Selling expenses 1170 Administraion expenses 3850 TOTAL(C) 10820 operating income(B-C) 16450Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.