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Prepare a contribution margin format income statement

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Reference no: EM13912295

Prepare a contribution margin format income statement; answer what-if Questions. Shown here is an income statement in the traditional format for a firm with a sales volume of 15,000 units:

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $105,000

Cost of goods sold ($8,000 + $3.60/unit) . . . . . . . . . . . . . . . . . . . . . . . $62,000

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $43,000

Operating expenses:Selling ($1,500 + $0.80/unit) . . . . . . . . . . . . . . . . .. $13,500

Administration ($4,000 + $0.50/unit) . . . . . . . . . . . . . . . . . . . . . . . . . $11,500

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$18,000

 

Required:

a. Prepare an income statement in the contribution margin format.

b. Calculate the contribution margin per unit and the contribution margin ratio.

c. Calculate the firm's operating income (or loss) if the volume changed from 15,000 units to

1. 20,000 units.

2. 10,000 units.

d. Refer to your answer to part a when total revenues were $105,000. Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change and total revenues

1. Increase by $15,000.

2. Decrease by $10,000.

Reference no: EM13912295

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