Solution-Prepare the contribution margin income statement

Prepare the contribution margin income statement

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Reference no: EM132229594

Question - The annual data that follows pertain to Goggles Only, a manufacturing of swimming goggles (the company had no beginning inventory):

Sales Price	$42
Variable manufacturing expense per unit	$18
Sales commission expense per unit	$5
Fixed manufacturing overhead	$2,000,000
Fixed operating expenses	$250,000
Number of goggles produced	200,000
Number of goggles sold	186,000

Requirements -

1. Prepare both conventional? (absorption costing) and contribution margin? (variable costing) income statements for Goggles Only for the year.

2. Which statement shows the higher operating? income? Why?

3. The company marketing vice president believes a new sales promotion that costs $150,000 would increase sales to 200,000 goggles. Should the company go ahead with the? promotion? Give your reason.

Reference no: EM132229594

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Prepare the contribution margin income statement

Reference no: EM132229594

Reference no: EM132229594

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