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Need help with E. Sheridan Markets imports and sells small bear-shaped piatas. In planning for the coming year, the company's owner is evaluating several scenarios.
Need help with E.
Sheridan Markets imports and sells small bear-shaped piatas. In planning for the coming year, the company's owner is evaluating several scenarios. For each scenario under consideration, prepare a contribution margin income statement showing the anticipated operating income. Consider each scenario is applied independently to the original data. Last year's income statement is as follows: Total Per Unit $936,000 $24.00 Sales revenue Variable expenses Contribution margin 390,000 10.00 546,000 $14.00 Fixed expenses 175,000 Operating income $371.000 (a) Your answer is correct. The sales price increases by 10% and sales volume decreases by 6%. (Round per unit answers to 2 decimal places, eg. 0.38.) Sheridan Markets Income Statement Total Per Unit Sales 967,824 264 Variable expenses 366,600 10 Contribution margin 601.224 16.4 Fixed expenses 175,000 i Operating income $ 426,224 (b) Your answer is correct. The sales price increases by 8% and variable cost per unit increases by 6%. (Round per unit answers to 2 decimal places, eg. 0.38.) Sheridan Markets Income Statement Total Per Unit Sales 1,010,880 25.92 Variable expenses 413,400 i 10.6 Contribution margin 597,480 15:32 Fixed expenses 175,000 1 Operating income 422,480 (c) Your answer is correct. The sales price decreases by 5% and sales volume increases by 15%. (Round per unit answers to 2 decimal places, eg. 0.38.) Sheridan Markets Income Statement Total Per Unit Sales 1.022.580 22.8 Variable expenses 448,500 10 Contribution margin 574,080 $ 12.8 Fixed expenses 175,000 Operating income 399.000 (d) Your answer is correct. Fixed expenses increase by $40,000. (Round per unit answers to 2 decimal places, eg. 0.38.) Sheridan Markets Income Statement Total Per Unit Sales 936,000 $ 24 Variable expenses 390,000 10 Contribution margin 546,000 $ 14 Fixed expenses 215,000 Operating income 331,000 le) Your answer is partially correct. The sales price increases by 12%, variable cost per unit increases by 15%, fixed expenses increase by $30,000, and sales volume decreases by 15%. (Round per unit answers to 2 decimal places, eg 0.38.) Sheridan Markets Income Statement Total Per Unit Sales B35.380 $ 25.2 381.225 1115 Variable expenses 454 155 $ 13.7 Contribution margin Fixed expenses 205.000 1 249.155 Operating income Step by Step Solution
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