12 B 1 Chapter 1: Applying Excel 2 3 Data 4 Sales $12,000 5 Variable costs 6 Cost of goods sold $6,000 7 Variable selling $600 B Variable administrative $400 9 Fixed costs 10 Fixed selling $2,500 11 Fixed administrative $1,500 13 Enfer a formula into each of the cells marked with a ? below 14 Exhibit 1.7 15 16 Traditional Format Income Statement 17 Sales 2 18 Cost of goods sold ? 19 Gross margin ? 20 Selling and administrative expenses 21 Selling 22 Administrative ? ? 23 Net operating income ? 24 25 Contribution Format Income Statement 26 Sales 27 Variable expenses: 28 Cost of goods sold 29 Variable selling 30 Variable administration ? 31 Contribution margin ? 32 Foed expenses 33 Fixed selling 34 Fixed administrative ? 35 Net operating income 36 ** Chapter 1 Form Filed in Chapter 1 Form ??? ? ? 2 Required: 1. Check your worksheet by changing the variable selling cost in the Data area to $900, keeping all of the other data the same as in Page 48 Exhibit 1-7. If your worksheet is operating properly , the net operating income under the traditional format income statement and under the contribution format income statement should now be $700 and the contribution margin should now be $4,700. If you do not get these answers, find the errors in your worksheet and correct them How much is the gross margin? Did it change? Why or why not? 2. Suppose that sales are 10% higher as shown below: Sales $13,200 Variable costs: Cost of goods sold $6,600 $660 Variable selling Variable administrative Fixed costs: $440 Fixed selling $2.500 Fixed administrativo $1,500 Enter this new data into your worksheet. Make sure that you change all of the data that are different-not just the sales. Print or copy the income statements from your worksheet What happened to the variable costs and to the fixed costs when sales increased by 10%? Why? Did the contribution margin increase by 10%? Why or why not? Did the net operating income increase by 10%? Why or why not