Enter a formula into each of the cells marked with a ? below Exhibit 1-7 $ 12,000 6,000 6,000 Traditional Format Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling $ Administrative Net operating income 3,100 1,900 5,000 $ 1,000 $ 12,000 Contribution Format Income Statement Sales Variable expenses: Cost of goods sold $ Variable selling Variable administration Contribution margin Fixed expenses Fixed selling Fixed administrative Net operating income 6,000 600 400 7,000 5,000 2,500 1,500 4,000 $ 1,000 ! Required information The Chapter 1 Form worksheet is to be used to create your own worksheet version of Exhibit 1-7 in the text. 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 2 3 Data 4 Sales $ 43,000 5 6 $ Variable costs Cost of goods sold Variable selling Variable administrative 7 $ 21,500 2,200 2,000 8 $ 9 10 Fixed costs: Fixed selling Fixed administrative $ 2,500 1,500 11 $ If your formulas are correct, you should get the correct answers to the following questions. (a) What is the gross margin now? Gross margin (b) What is the net operating income now? Net operating income (c) What is the contribution margin now? Contribution margin 2. Suppose that sales are 17% higher as shown bel B . Chapter 1: Applying Excel 1 2. 3 3 4 $ 50,310 5 6 $ 7 Data Sales Variable costs: Cost of goods sold Variable selling Variable administrative Fixed costs: Fixed selling Fixed administrative $ 25,155 2,574 2,340 8 $ 9 10 $ $ 2,500 15001 11 Enter this new data into your worksheet. Make sure you enter all of the new data - not just the sales. (a) What is the gross margin now? Gross margin (b) What is the net operating income now? Net operating income (c) What is the contribution margin now? Contribution margin (d) When sales increase by 17%, which of the following should also increase by 17% 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 (e) When sales increase by 17%, which of the following should increase by more than 17% 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 Net operating income