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"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 adeling 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) Using the following income statements, prepare a contribution margin income statement for March. (Round per unit answers to 2 decimal places, eg. 5275) February $25,000 10,000 15,000 March $37,500 15,000 22,500 1,500 1,500 3,500 Sales revenue Cost of goods sold Gross profit Rent expense Wages expense Shipping expense Utilities expense Advertising expense Insurance expense Operating income 1,150 750 1,000 585 $6,515 5,000 1,650 750 1,400 585 $11,615 Your answer is partially correct. Just after Blake completed an income projection for 2,200 stuffed mascots, his supplier called to inform him of a 10% increase in cost of goods sold, effective immediately. Blake knows that he cannot pass the entire increase on to his customers, but thinks he can pass on half of the 10% increase while suffering only a 10% decrease in units sold. Calculate the operating income? New projection with price increase $ New projection without price increase Should Blake respond to the increase in cost of goods sold with an increase in price? Ves v "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 adeling 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) Using the following income statements, prepare a contribution margin income statement for March. (Round per unit answers to 2 decimal places, eg. 5275) February $25,000 10,000 15,000 March $37,500 15,000 22,500 1,500 1,500 3,500 Sales revenue Cost of goods sold Gross profit Rent expense Wages expense Shipping expense Utilities expense Advertising expense Insurance expense Operating income 1,150 750 1,000 585 $6,515 5,000 1,650 750 1,400 585 $11,615 Your answer is partially correct. Just after Blake completed an income projection for 2,200 stuffed mascots, his supplier called to inform him of a 10% increase in cost of goods sold, effective immediately. Blake knows that he cannot pass the entire increase on to his customers, but thinks he can pass on half of the 10% increase while suffering only a 10% decrease in units sold. Calculate the operating income? New projection with price increase $ New projection without price increase Should Blake respond to the increase in cost of goods sold with an increase in price? Ves v
