ce Booksh... VitalSource Booksh... EXHIBIT 1-7 Comparing Traditional and Contribution Format Income Statements for Merchandising Companies (all numbers are given) $12,000 Traditional Format Sales Cost of goods sold Gross margin Selling and administrative expenses. Selling Administrative Net operating income Contribution Format $12,000 Sales 6,000 Variable expenses. 6.000 Cost of goods sold Variable selling Variable administrative. 5,000 Contribution margin $ 1,000 Fixed expenses Fixed selling Fixed administrative Net operating income $6,000 600 400 $3,100 1900 7,000 5,000 2,500 1,500 4,000 $_1000 "For a manufacturing company, the cost of goods sold would include some variable costs, such as direct materials direct labor, and vartable overhead and sometidos such as food manufacturing overhead Income statentent formats for manufacturing companies will be explored in greater detail in a subsequent chapter Cost of poods sold Beginning merchinnidise Prices inventory Ending che inventory Cost of goods sold Purchases Beginning merchandise inventory $7,000 36.000 Ending merchandise inventory 34,000 33.000 ILACCI SHuldum Savod 1. Now change all of the dollar amounts in the data area of your worksheet so that it looks like this: A B 1 Chapter 1: Applying Excel 129:40 2 5 21,000 Book 3 Data 4 Sales 5 Variable costs 6 Cost of goods 7 Variable selling 8 Variable administrative 9 Fixed costs 10 Fored selling 11 Fixed administrative $ $ 10,500 1,100 900 $ S 2500 1.500 $ 1 of 1 Next here to search 1 Required information If your formulas are correct, you should get the correct answers to the following questions. 11 points (a) What is the gross margin now? 01:29:22 Gross margin eBook Print (b) What is the net operating income now? Net operating Income MC Play Next Grani Type here to search e @ Simulation i Saved ! Required information (c) What is the contribution margin now? Contribution margin 2. Suppose that sales are 27% higher as shown below: Required information 2. Suppose that sales are 27% higher as shown below: nts A B 3 01:28:55 1 Chapter 1: Applying Excel 2 Data eBook 4 Sales $ 26,670 41 Print 5 6 $ 13,335 1.397 7 $ Variable costs: Cost of goods sold Variable selling Variable administrative Fixed costs Fixed selling Fixed administrative 69 00 1,143 9 S 10 2.500 1.500 $ 11 Required information CHE LISTEW Udla mo your WOIKSTEEL make sure you enter all Or Die new udld - (a) What is the gross margin now? nts 3. Gross margin 01:28:42 eBook Print (b) What is the net operating income now? Net operating income (a) What is the contribution margin now? c Next Help Su Required information (d) When sales increase by 27%, which of the following should also increase by 27% in a merchandising company? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) 2 Variable cost mo ? Fixed cost 2 Gross margin 2 Contribution margin 2 Net operating income (e) When sales increase by 27%, which of the following should increase by more than 27% in a merchandising company (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and Prey 1 of 1 !!! Next e earch hp Required information ? Net operating income (e) When sales increase by 27%, which of the following should increase by more than 27% in a merchandising company? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Variable cost Fixed cost ? Gross margin ? Contribution margin 2 Net operating income Brey 1 of 1 Nord e Search (hp
