Ill 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 wed make $9,848. But this income statement shows an operating income of $11,615! How can I ever make plans if I cant predict my income? Im 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 months 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 cost we paid for each mascot, so I dont 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. Id be happy to explain how you made so much more operating income than you were expecting.

(b)

Correct answer iconYour answer is correct.

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.)

		February		March
Sales revenue		$25,000		$37,500
Cost of goods sold		10,000		15,000
Gross profit		15,000		22,500
Rent expense		1,500		1,500
Wages expense		3,500		5,000
Shipping expense		1,100		1,650
Utilities expense		750		750
Advertising expense		1,000		1,400
Insurance expense		585		585
Operating income		$6,565		$11,615

(c)

Correct answer 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? (Round per unit to 2 decimal places and final answer to 0 decimal places, e.g. 5,275.)

Operating income

4,040

Can someone please explain to me why this is the answer.

The section before this was a comprehensive income statement for march just in case that information was relevant.

the per unit for advertising was .40 and 1.50 for wages and it showed was correct on the CIS.

I could not calculate that way so i decided to see what the FC were I got this:

12.50(1500)-7.45(1500)- FC= 4,040 -------> FC = 3,535

I just don't know how they got to it while using the 1,500 and the VC of .40 and 1.50

I used the FC to answer the next question so I know the 3535 is right as well as the CM of 7.45 If you can please clarify, thank you.