Saved Todrick Company is a merchandiser that reported the following in $ 375,000

Question

Saved Todrick Company is a merchandiser that reported the following in $ 375,000 $ 25,000 $ 25e,0e0 $ 12,5e0 Sales Beginning merchandise inventory Purchases Ending merchandise inventory Fixed selling expense Fixed administrative expense Variable selling expense Variable administrative expense Contribution margin Net operating income $ 15,0e0 $ 18,750 $ 75,eee $22, see Required: 1. Prepare a contribution format income statement. 2. Prepare a traditional format income statement 3. Calculate the selling price per unit 4. Calculate the variable cost per unit 5. Calculate the contribution margin per unit 6. Which income statement format treditional format or contrbut net operating income wil change in responses to c hanges in unit re ? 0

Explanation / Answer

Solution:

Part 1 – Contribution Format Income Statement

Contribution Format Income Statement

$$

$$

Sales Revenue

$375,000

Variable Costs:

Beginning merchandise Inventory

$25,000

Plus: Purchases

$250,000

Less: Ending Merchandise Inventory

($12,500)

Direct Materials used in production

(direct materials is always variable)

$262,500

Variable Selling Expenses

$18,750

Variable administrative expense

$18,750

Total Variable Costs

$300,000

Contribution Margin (Sales - Total Variable Costs)

$75,000

Fixed Costs:

Fixed Selling Expense

$37,500

Fixed Administrative Expense

$15,000

Total Fixed Costs

$52,500

Net Operating Income (Contribution Margin - Total Fixed Costs)

$22,500

Part 2 – Traditional Format Income Statement

Traditional Format Income Statement

$$

$$

Sales Revenue

$375,000

Cost of goods sold:

Beginning merchandise Inventory

$25,000

Plus: Purchases

$250,000

Less: Ending Merchandise Inventory

($12,500)

Direct Materials used in production (direct materials is always variable)

or Cost of Goods Sold

$262,500

Gross Profit

$112,500

Selling and Administrative Expenses:

Variable Selling Expenses

$18,750

Variable administrative expense

$18,750

Fixed Selling Expense

$37,500

Fixed Administrative Expense

$15,000

Total Selling and administrative expenses

$90,000

Net Operating Income

$22,500

Part 3 --- Selling Price per unit ---- Number of Sold Units are not given

Part 4 – Variable Cost per unit = Total Variable Cost / Units Produced

Here units produced are not given.

Pls provide the information about units sold and produced in order to calculate the Part 3 to 5

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Contribution Format Income Statement

$$

$$

Sales Revenue

$375,000

Variable Costs:

Beginning merchandise Inventory

$25,000

Plus: Purchases

$250,000

Less: Ending Merchandise Inventory

($12,500)

Direct Materials used in production

(direct materials is always variable)

$262,500

Variable Selling Expenses

$18,750

Variable administrative expense

$18,750

Total Variable Costs

$300,000

Contribution Margin (Sales - Total Variable Costs)

$75,000

Fixed Costs:

Fixed Selling Expense

$37,500

Fixed Administrative Expense

$15,000

Total Fixed Costs

$52,500

Net Operating Income (Contribution Margin - Total Fixed Costs)

$22,500

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.