OrioleMarkets 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

Sales revenue

$968,000$22.00Variable expenses440,00010.00Contribution margin528,000$12.00Fixed expenses175,000Operating income$353,000

(a)

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• Correct Answer

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Your answer is correct.

The sales price increases by10% and sales volume decreases by6%.(Round per unit answers to 2 decimal places, e.g. 0.38.)

OrioleMarkets

Income Statement

Total

Per Unit

Sales$

enter a dollar amount

$

enter a dollar amount rounded to 2 decimal places

Variable expensesenter a dollar amount

enter a dollar amount rounded to 2 decimal places

Contribution marginenter a total dollar amount

$

enter a total dollar amount rounded to 2 decimal places

Fixed expensesenter a dollar amount

Operating income$

enter a total dollar amount

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(b)

The sales price increases by8% and variable cost per unit increases by6%.(Round per unit answers to 2 decimal places, e.g. 0.38.)

OrioleMarkets

Income Statement

Total

Per Unit

Sales$

enter a dollar amount

$

enter a dollar amount rounded to 2 decimal places

Variable expensesenter a dollar amount

enter a dollar amount rounded to 2 decimal places

Contribution marginenter a total dollar amount

$

enter a total dollar amount rounded to 2 decimal places

Fixed expensesenter a dollar amount

Operating income$

enter a total dollar amount

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(c)

The sales price decreases by5% and sales volume increases by15%.(Round per unit answers to 2 decimal places, e.g. 0.38.)

OrioleMarkets

Income Statement

Total

Per Unit

Sales$

enter a dollar amount

$

enter a dollar amount rounded to 2 decimal places

Variable expensesenter a dollar amount

enter a dollar amount rounded to 2 decimal places

Contribution marginenter a total dollar amount

$

enter a total dollar amount rounded to 2 decimal places

Fixed expensesenter a dollar amount

Operating income$

enter a total dollar amount

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(d)

Fixed expenses increase by $50,000.(Round per unit answers to 2 decimal places, e.g. 0.38.)

OrioleMarkets

Income Statement

Total

Per Unit

Sales$

enter a dollar amount

$

enter a dollar amount rounded to 2 decimal places

Variable expensesenter a dollar amount

enter a dollar amount rounded to 2 decimal places

Contribution marginenter a total dollar amount

$

enter a total dollar amount rounded to 2 decimal places

Fixed expensesenter a dollar amount

Operating income$

enter a total dollar amount

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(e)

The sales price increases by12%, variable cost per unit increases by15%, fixed expenses increase by $30,000, and sales volume decreases by15%.(Round per unit answers to 2 decimal places, e.g. 0.38.)

OrioleMarkets

Income Statement

Total

Per Unit

Sales$

enter a dollar amount

$

enter a dollar amount rounded to 2 decimal places

Variable expensesenter a dollar amount

enter a dollar amount rounded to 2 decimal places

Contribution marginenter a total dollar amount

$

enter a total dollar amount rounded to 2 decimal places

Fixed expensesenter a dollar amount

Operating income$

enter a total dollar amount

eTextbook and Media