Current Attempt in Progress "I'll never understand this accounting stuff, Blake Dunn yelled, waving the income statement he had just received from his accountant in the morning mail. Last month, we sold 2,000 stuffed State University mascots and earned $6,565 in operating income. This month, when we sold 3,000 I thought we'd make $9,848. But this income statement shows an operating income of $11,615! How can I ever make plans if I can't predict my income? I'm going to give Janice one last chance to explain this to me," he declared as he picked up the phone to call Janice Miller, his accountant. "Will you try to explain this operating income thing to me one more time?" Blake asked Janice. After I saw last month's income statement, I thought each mascot we sold generated $3.28 in net income; now this month, each one generates $3.87! There was no change in the price we paid for each mascot, so I don't understand how this happened. If I had known I was going to have $11,615 in operating income, I would have looked more seriously at adding to our product line." Taking a deep breath, Janice replied, Sure, Blake. I'd be happy to explain how you made so much more operating income than you were expecting." (b) Your Answer Correct Answer (Used) Using the following income statements, prepare a contribution margin income statement for March. (Round per unit answers to 2 decimal places, e.g. 52.75.) March Sales revenue Cost of goods sold Gross profit Rent expense Wages expense Shipping expense Utilities expense Advertising expense Insurance expense Operating income February $25,000 10,000 15,000 1,500 3,500 1,150 $37,500 15,000 22,500 1,500 5,000 1,650 750 750 1,000 1,400 585 585 $6,515 $11,615 Total Per unit Sales $ 37,500 $ 12.50 Variable costs Cost of goods sold 15,000 5.00 Shipping 1,650 0.55 Advertising 1,200 0.40 Wages 4,500 1.50 Total variable costs 22,350 7.45 Contribution margin 15,150 $ 5.05 Fixed expenses Insurance 585 Utilities 750 Rent 1,500 Wages 500 Shipping 1,650 0.55 Advertising 1,200 0.40 Wages 4,500 1.50 Total variable costs 22,350 7.45 Contribution margin V 15,150 $ 5.05 Fixed expenses Insurance 585 Utilities 750 Rent 1,500 Wages 500 Advertising 200 Total fixed expenses 3,535 Operating income $ 11,615 (c) Your answer is correct. Blake plans to sell 1,500 stuffed mascots next month. How much operating income can Blake expect to earn next month if he realizes his planned sales? Operating income 4040 e Textbook and Media Attempts: 1 of 3 used (d) Blake wasn't happy with the projected income statement you showed him for a sales level of 1,500 stuffed mascots. He wants to know how many stuffed mascots he will need to sell to earn $5,555 in operating income. mascots As a safety net, he also wants to know how many stuffed mascots he will need to sell to break even. (Round answer to O decimal places, e.g. 5,275.) mascots e Textbook and Media Save for Later Attempts: 0 of 3 used Submit
