Question
Problem 1-19 Traditional and Contribution Format Income Statements [LO1-6] Todrick Company is a merchandiser that reported the following information based on 1,000 units sold: Sales
Problem 1-19 Traditional and Contribution Format Income Statements [LO1-6]
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:
Sales | $ | 315,000 |
Beginning merchandise inventory | $ | 21,000 |
Purchases | $ | 210,000 |
Ending merchandise inventory | $ | 10,500 |
Fixed selling expense | $ | ? |
Fixed administrative expense | $ | 12,600 |
Variable selling expense | $ | 15,750 |
Variable administrative expense | $ | ? |
Contribution margin | $ | 63,000 |
Net operating income | $ | 18,900 |
Required:
1. Prepare a contribution format income statement.
2. Prepare a traditional format income statement.
3. Calculate the selling price per unit.
4. Calculate the variable cost per unit.
5. Calculate the contribution margin per unit.
6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales?
It does not have the option of total variable expense or total fixed expense... so what should I put in there???
Todrick Company Contribution Format Income Statement $ 315,000 Sales Variable expenses $ 220,500 Cost of goods sold Selling expense Administrative expense Variable manufacturing overhead 220,500 Contribution margin Fixed expenses Selling expense Administrative expense Fixed manufacturing overhead Net operating income Prepare a traditional format income statement. Todrick Company Traditional Income Statement 0 Selling and administrative expenses: Req 1 Req 3 to 5 > Req 1 Req 3 to 5 Req 2 Req 6 3. Calculate the selling price per unit. 4. Calculate the variable cost per unit. 5. Calculate the contribution margin per unit. |3. Selling price per unit 4 Variable cost per unit 5. Contribution margin per unit Req 2 Req 6
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