Following is the income statement of Wicked Company, a manufacturer of men's blue jeans: (Click the icon to view the income statement.) Wicked had manufactured 0.8 million pairs of jeans, which had been sold to various clothing wholesalers and department stores. At the start of 20X0, the president, Judy Catone, died unexpectedly. Her son, Bob, became the new president. Bob had worked for 15 years in the marketing phases of the business. He knew very little about accounting and manufacturing, which were his mother's strengths. Bob has several questions, including inquiries regarding the pricing of special orders. Read the requirements. Requirement 1. To prepare better answers, you decide to recast the income statement in contribution form. Variable manufacturing cost was $28 million. Variable selling and administrative expenses, which were mostly sales commissions, shipping expenses, and advertising allowances paid to customers based on units sold, were $7.8 million. Prepare the revised income statement. (Enter per unit amounts to the nearest cent.) Total Per Unit Sales Less Less Following is the income statement of Wicked Company, a manufacturer of men's blue jeans: (Click the icon to view the income statement.) Wicked had manufactured 0.8 million pairs of jeans, which had been sold to various clothing wholesalers and department stores. At the start of 20X0, the president, Judy Catone, died unexpectedly. Her son, Bob, became the new president. Bob had worked for 15 years in the marketing phases of the business. He knew very little about accounting and manufacturing, which were his mother's strengths. Bob has several questions, including inquiries regarding the pricing of special orders. Read the requirements. were $7.8 million. Prepare the revised income statement. (Enter per unit amounts to the nearest cent.) Total Per Unit Sales Less Less Operating income Choose from any list or enter any number in the input fields and then click Check Answer. A Requirements 1. To prepare better answers, you decide to recast the income statement in contribution form. Variable manufacturing cost was $28 million. Variable selling and administrative expenses, which were mostly sales commissions, shipping expenses, and advertising allowances paid to customers based on units sold, were $7.8 million. Prepare the revised income statement. 2. Bob asks, "I can't understand financial statements until I know the meaning of various terms. In scanning my mother's assorted notes, I found the following pertaining to both total and unit costs: full manufacturing cost, variable cost, full cost, fully allocated cost, gross margin, and contribution margin. Using our data for 20X0, please give me a list of these costs, their total amounts, and their per-unit amounts." (Assume that Wicked Company defines fully allocated cost as full manufacturing costs plus selling and administrative costs.) 3. He also says, "Near the end of 20X0, I brought in a special order from Vanity for 20,000 jeans at $50 each. I said I'd accept a flat $25,000 sales commission instead of the usual 4% of selling price, but my mother refused the order. She usually upheld a relatively rigid pricing policy, saying that it was bad business to accept orders that did not at least generate full manufacturing cost plus 25% of full manufacturing cost. That policy bothered me. We had idle capacity. The way I figured, our manufacturing costs would go up by 20,000 x $41 = $820,000, but our selling and administrative expenses would go up by only $25,000. That would mean additional operating income of 20,000 ($50 - $41) minus $25,000, or $180,000 minus $25,000, or $155,000. That's too much money to give up just to maintain a general pricing policy. Was my analysis of the impact on operating income correct? If not, please show me the correct additional operating income." 4. After receiving the explanations offered in number 2 and 3, Bob said, "Forget that I had the Vanity order. I had an even bigger order from Bobbe Breen. It was for 50,000 units and would have filled the plant completely. I told my mother I'd settle for no commission. There would have been no selling and administrative costs whatsoever because Bobbe Breen Wicked Company Income Statement for the Year Ended December 31, 20X0 Total Per Unit Sales $ 48,000,000 $ 60.00 32,800,000 41.00 Less: Cost of goods sold Gross margin $ 15,200,000 $ 19.00 Less selling and administrative expenses 9,200,000 11.50 $ 6,000,000 $ 7.50 Operating income $ Following is the income statement of Wicked Company, a manufacturer of men's blue jeans: (Click the icon to view the income statement.) Wicked had manufactured 0.8 million pairs of jeans, which had been sold to various clothing wholesalers and department stores. At the start of 20X0, the president, Judy Catone, died unexpectedly. Her son, Bob, became the new president. Bob had worked for 15 years in the marketing phases of the business. He knew very little about accounting and manufacturing, which were his mother's strengths. Bob has several questions, including inquiries regarding the pricing of special orders. Read the requirements. Requirement 1. To prepare better answers, you decide to recast the income statement in contribution form. Variable manufacturing cost was $28 million. Variable selling and administrative expenses, which were mostly sales commissions, shipping expenses, and advertising allowances paid to customers based on units sold, were $7.8 million. Prepare the revised income statement. (Enter per unit amounts to the nearest cent.) Total Per Unit Sales Less Less Following is the income statement of Wicked Company, a manufacturer of men's blue jeans: (Click the icon to view the income statement.) Wicked had manufactured 0.8 million pairs of jeans, which had been sold to various clothing wholesalers and department stores. At the start of 20X0, the president, Judy Catone, died unexpectedly. Her son, Bob, became the new president. Bob had worked for 15 years in the marketing phases of the business. He knew very little about accounting and manufacturing, which were his mother's strengths. Bob has several questions, including inquiries regarding the pricing of special orders. Read the requirements. were $7.8 million. Prepare the revised income statement. (Enter per unit amounts to the nearest cent.) Total Per Unit Sales Less Less Operating income Choose from any list or enter any number in the input fields and then click Check Answer. A Requirements 1. To prepare better answers, you decide to recast the income statement in contribution form. Variable manufacturing cost was $28 million. Variable selling and administrative expenses, which were mostly sales commissions, shipping expenses, and advertising allowances paid to customers based on units sold, were $7.8 million. Prepare the revised income statement. 2. Bob asks, "I can't understand financial statements until I know the meaning of various terms. In scanning my mother's assorted notes, I found the following pertaining to both total and unit costs: full manufacturing cost, variable cost, full cost, fully allocated cost, gross margin, and contribution margin. Using our data for 20X0, please give me a list of these costs, their total amounts, and their per-unit amounts." (Assume that Wicked Company defines fully allocated cost as full manufacturing costs plus selling and administrative costs.) 3. He also says, "Near the end of 20X0, I brought in a special order from Vanity for 20,000 jeans at $50 each. I said I'd accept a flat $25,000 sales commission instead of the usual 4% of selling price, but my mother refused the order. She usually upheld a relatively rigid pricing policy, saying that it was bad business to accept orders that did not at least generate full manufacturing cost plus 25% of full manufacturing cost. That policy bothered me. We had idle capacity. The way I figured, our manufacturing costs would go up by 20,000 x $41 = $820,000, but our selling and administrative expenses would go up by only $25,000. That would mean additional operating income of 20,000 ($50 - $41) minus $25,000, or $180,000 minus $25,000, or $155,000. That's too much money to give up just to maintain a general pricing policy. Was my analysis of the impact on operating income correct? If not, please show me the correct additional operating income." 4. After receiving the explanations offered in number 2 and 3, Bob said, "Forget that I had the Vanity order. I had an even bigger order from Bobbe Breen. It was for 50,000 units and would have filled the plant completely. I told my mother I'd settle for no commission. There would have been no selling and administrative costs whatsoever because Bobbe Breen Wicked Company Income Statement for the Year Ended December 31, 20X0 Total Per Unit Sales $ 48,000,000 $ 60.00 32,800,000 41.00 Less: Cost of goods sold Gross margin $ 15,200,000 $ 19.00 Less selling and administrative expenses 9,200,000 11.50 $ 6,000,000 $ 7.50 Operating income $