QUESTION 1 (a) Traditional Costing income. Sales Less: cost of goods sold 430 000 Variable production expense 84 000 Fixed production expense 102 000 186 000 Gross-profit 244 000 Less: Selling and admin expense Variable selling expense 16 000 Variable admin expense 28 000 Fixed selling expense Fixed admin expense Operating income 44 000 121 000 209 000 35 000 (b) Contribution Approach Income Statement Sales 430 000 Less: variable cost Variable production expense 84 000 Variable selling expense 16.000 Variable admin expense 28 000 128 000 Contribution margin 302 000 Fixed expenses: Fixed production expense 102 000 Fixed selling expense 44 000 Fixed admin expense 121 000 267 000 Operating income 35 000