Item11

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Item 11

Shown here is an income statement in the traditional format for a firm with a sales volume of 17,500 units:

Revenues$ 210,000Cost of goods sold ($10,500 + $2.85/unit)60,375Gross profit$ 149,625Operating expenses: Selling ($2,100 + $0.85/unit)16,975Administrative ($5,400 + $0.50/unit)14,150Operating income$ 118,500

Required:

1. Prepare an income statement in the contribution margin format.
2. Calculate the contribution margin per unit and the contribution margin ratio.
3. Calculate the firm's operating income (or loss) if the volume changed from 17,500 units to
   1. 22,500 units.
   2. 9,500 units.
4. Refer to your answer to part a when total revenues were $210,000. Calculate the firm's operating income (or loss) if unit selling price and variable expense per unit do not change and total revenues
   1. Increase by $13,000.
   2. Decrease by $9,500.

\\begin{tabular}{|l|l|l|} \\hline Contribution margin per unit & & \\\\ \\hline Contribution margin ratio & & \ \\\\ \\hline \\end{tabular}