Assume that you are part of the accounting team for Epstein Hardware. The company has only one product that sells for $20 per unit. Epstein estimates total fixed costs to be $9,800. Epstein estimates direct materials cost of $4.00 per unit, direct labor costs of $5.00 per unit, and variable overhead costs of $1.00 per unit. The CEO would like to see what the gross margin and operating income will be if 1400 units are sold in the next period. Provide a contribution margin income statement.

Epstein Hardware Contribution Margin Income Statement

Sales$

Less: Variable costs

Contribution margin

Less: Fixed costs

Operating income