Problem 3-30

Sandhill imports and sells small bear-shaped piatas. In planning for the coming year, the companys owner is evaluating several scenarios. For each scenario under consideration, prepare a contribution margin income statement showing the anticipated operating income. Consider each scenario independently. Last years income statement is as follows:

		Total		Per Unit
Sales revenue		$700,000		$14.00
Variable expenses		300,000		6.00
Contribution margin		400,000		$8.00
Fixed expenses		184,000
Operating income		$216,000

The sales price increases by 10% and variable cost per unit increases by 5%. (Round per unit answers to 2 decimal places, e.g. 0.38.)

Sandhill Income Statement
		Total		Per Unit
Sales		$		$
Variable expenses
Contribution margin				$
Fixed expenses
Operating income		$

The sales price decreases by 10% and sales volume increases by 20%. (Round per unit answers to 2 decimal places, e.g. 0.38.)

Sandhill Income Statement
		Total		Per Unit
Sales		$		$
Variable expenses
Contribution margin				$
Fixed expenses
Operating income		$

Fixed expenses increase by $21,500. (Round per unit answers to 2 decimal places, e.g. 0.38.)

Sandhill Income Statement
		Total		Per Unit
Sales		$		$
Variable expenses
Contribution margin				$
Fixed expenses
Operating income		$

The sales price increases by 10%, variable cost per unit increases by 10%, fixed expenses increase by $25,000, and sales volume decreases by 10%. (Round per unit answers to 2 decimal places, e.g. 0.38.)

Sandhill Income Statement
		Total		Per Unit
Sales		$		$
Variable expenses
Contribution margin				$
Fixed expenses
Operating income		$