6 A manufacturer of tiling grout has supplied the following data: Kilograms prod

Question

6 A manufacturer of tiling grout has supplied the following data: Kilograms produced and sold Sales revenue Variable manufacturing expense Fixed manufacturing expense Variable selling and administrative expense Fixed selling and administrative expense Net operating income 310,000 $1.940,000 $959,000 $264,000 $357,000 $230,000 $130,000 Prepare a contribution income statement with the above information: The Company's contribution margin is: The Company's variable expense ratio is: The company's contribution margin ratio is

Explanation / Answer

Contribution Income statement

Sales $1940000

Variable expenses:

variable manufacturing expense ($959000)

variable selling and administrative expense ($357000)

Contributin margin $624000

Fixed manufacturing expense ($264000)

Fixed selling and administrative expense ($230000)

Net operating income $130000

Contribution margin $624000

Variable expense ratio = $1316000 / $1940000

= 67.83%

Contribution margin ratio = $624000 / $1940000

= 32.16%.

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