Question
Morton Companys contribution format income statement for last month is given below: Sales (42,000 units $29 per unit) $ 1,218,000 Variable expenses 852,600 Contribution margin
Morton Companys contribution format income statement for last month is given below:
Sales (42,000 units $29 per unit) | $ | 1,218,000 | |
Variable expenses | 852,600 | ||
Contribution margin | 365,400 | ||
Fixed expenses | 292,320 | ||
Net operating income | $ | 73,080 | |
|
The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits.
Required:
1. New equipment has come onto the market that would allow Morton Company to automate a portion of its operations. Variable expenses would be reduced by $8.70 per unit. However, fixed expenses would increase to a total of $657,720 each month. Prepare two contribution format income statements, one showing present operations and one showing how operations would appear if the new equipment is purchased. (Round your "Per unit" answers to 2 decimal places.)
Can you help me find the per unit and % for each, check work, show and explain your answer please
worton Company's contribution format income statement for lo onth is given below Sales (42.000 units x 520 per unit) Variable expenses Contribution margin Foed expenses Net operating income $1.218.000 352.600 400 2320 $12.000 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying way of improving profits Required: New equipment has come onto the market that would allow Morton Company to automate a portion of its operations. Variable expenses would be reduced by S8.70 per unit. However, fixed expenses would increase to a total of 5657,720 each month Prepare two Contribution format income statements, one showing present operations and one showing how operations would appear if the new equipment is purchased (Round your "Per unit answers to 2 decimal places.) Sales Variable expenses Contribution margin Faced expenses Det operating Income Morton Company Contribution Income Statement Present Amount Per Unit $ 1.218,000 $ 20.30 100% 562.000 11.00 % 365.400 5 8.70 100% 292,320 5 73.000 Proposed Amount Per Unit $ 1.218.000 487.200 730,800 5 0.00 657.720 $ 72.000 1 o 09Step by Step Solution
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