Todrick Company is a merchandiser that reported the following information based

Question

Todrick Company is a merchandiser that reported the following information based on 1,000 units sold 345,000 $ 23,000 $ 230,000 $ 11,500 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 $13,800 $ 17,250 $ 69,000 $ 20,700 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 (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales? Complete this question by entering your answers in the tabs below

Explanation / Answer

1 Todrick Company Contribution Format Income Statement Sales 345000 Variable expenses: Cost of goods sold ($23000 + $230000 - $11500) 241500 Selling expense 17250 Administrative expense ($276000 - $241500 - $17250) 17250 Total variable expenses ($345000 - $69000) 276000 Contribution margin 69000 Fixed expenses: Selling expense ($48300 - $13800) 34500 Administrative expense 13800 Total fixed expense ($69000 - $20700) 48300 Net operating income $ 20700 2 Todrick Company Traditional Income Statement Sales 345000 Cost of goods sold 241500 Gross profit 103500 Selling and administrative expenses: Fixed selling expense 34500 Variable selling expense 17250 Fixed administrative expense 13800 Variable administrative expense 17250 82800 Net operating income $ 20700 3 Selling price per unit ($345000/1000) $345 4 Variable cost per unit ($276000/1000) $276 5 Contribution margin per unit ($345 - $276) $69 6 Contribution income statement

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