Reference no: EM133066246

Question - Shown here is an income statement in the traditional format for a firm with a sales volume of 19,000 units:

Revenues $171,000

Cost of goods sold ($10,500 + $3.00/unit) 67,500

Gross profit $103,500

Operating expenses:

Selling ($2,250 + $0.85/unit) 18,400

Administration ($4,650 + $0.35/unit) 11,300

Operating income $73,800

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 to

1. 24,000 units.

2. 11,000 units.

d. Refer to your answer to part a when total revenues were $171,000. Calculate the firm's operating income (or loss) if unit selling price and variable expense per unit do not change and total revenues

1. Increase by $12,500.

2. Decrease by $8,000.