Shown here is an income statement in the traditional format for a firm with a sa

Question

Shown here is an income statement in the traditional format for a firm with a sales volume of 19,000 units Revenues Cost of goods sold (S11,500+ $2.75/unit) Gross profit Operating expenses $247,000 63,750 $183,250 Selling ($2,450$0.85/unit) Administration (S4,700$0.40/unit) 18,600 12.300 $152,350 Operating income Required a. Prepare an income statement in the contribution margin format. Contribution Margin Income Statement evenues S 247,000 Variable expenses dministrative expenses t of goods sold elling expenses Total variable expenses ntribution margin 247,000 Fixed expenses ministrative expenses st of goods sold elling expenses Total fixed expenses perating income S 247,000

Explanation / Answer

a. Income Statement in contribution Margin format is as prepared below:

b.

c-1 Income when sale units changed to 24,000 units

c-2 Operating Income when sale units changed to 11,000 units

d. Operating Income when total revenue increase by 12,000

Contribution Margin Income Statement Revenues 247,000 Variable Expenses: Cost of goods sold 52,250 Selling expenses 16,150 Administrative exp 7,600 Total variable expenses 76,000 Contribution Margin 171,000 Fixed Expenses Cost of goods sold 11,500 Selling expenses 2,450 Administrative exp 4,700 Total fixed expenses 18,650 Operating Income 152,350

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