Universal Travel Contribution Margin Income Statement Three Months Ended March 3
ID: 2562102 • Letter: U
Question
Universal Travel
Contribution Margin Income Statement
Three Months Ended March 31, 2016
Sales Revenue
$317,500
Variable Costs
95,250
Contribution Margin
222,250
Fixed Costs
172,000
Operating Income
$50,250
For its top managers,
UniversalUniversal
Travel formats its income statement as follows:
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(Click
the icon to view the income statement.)
Universal'sUniversal's
relevant range is between sales of
$ 246 comma 000$246,000
and
$ 368 comma 000$368,000.
Requirements
1.
Calculate the contribution margin ratio.
2.
Prepare two contribution margin income statements: one at the
$ 246 comma 000$246,000
sales level and one at the
$ 368 comma 000$368,000
sales level.
(Hint:
The proportion of each sales dollar that goes toward variable costs is constant within the relevant range.)
Requirement 1. Calculate the contribution margin ratio.
Select the labels and enter the amounts to calculate the contribution margin ratio. (Enter the contribution margin ratio as a whole percentage, X%.)
Contribution margin
/
Net sales revenue
=
Contribution margin ratio
$222,250
/
$317,500
=
70
%
Requirement 2. Prepare two contribution margin income statements: one at the
$ 246 comma 000$246,000
sales level and one at the
$ 368 comma 000$368,000
sales level.
(Hint:
The proportion of each sales dollar that goes toward variable costs is constant within the relevant range.)
First prepare the contribution margin income statement at the
$ 246 comma 000$246,000
sales level. (Use a minus sign or parentheses for a loss.)
Universal Travel
Contribution Margin Income Statement
Three Months Ended March 31, 2016
Sales Revenue
$246,000
Variable Costs
73,800
Contribution Margin
172,200
Fixed Costs
172,000
Operating Income (Loss)
$200
Now prepare the contribution margin income statement at the
$ 368 comma 000$368,000
sales level. (Use a minus sign or parentheses for a loss.)
Universal Travel
Contribution Margin Income Statement
Three Months Ended March 31, 2016
Sales Revenue
368000
Variable Costs
Contribution Margin
Fixed Costs
Operating Income (Loss)
1.
Calculate the contribution margin ratio.
2.
Prepare two contribution margin income statements: one at the
$ 246 comma 000$246,000
sales level and one at the
$ 368 comma 000$368,000
sales level.
(Hint:
The proportion of each sales dollar that goes toward variable costs is constant within the relevant range.)
Explanation / Answer
Ans. Contribution margin ratio is : $222250/317500= 70%
V/P ratio (100-70) = 30%
Contribution Margin Income Statement
Sales value $246000 $368000
Less:Variable cost (246000X.30) $73800 $110400
(368000X.30)
Contribution (Sales-VC) $172200 $257600
Less:Fixed Cost $172000 $172000
Income/(loss) ($200) $85600
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