Reference no: EM131724352

Question - Prepare a contribution margin format income statement

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.