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Question 4 Mr Marshall is a manufacturer of earphones. The cost of earphones is shown as follows: Number of units sold 35,000 Selling price per
Question 4
Mr Marshall is a manufacturer of earphones. The cost of earphones is shown as follows:
Number of units sold 35,000
Selling price per unit $40
Variable selling expenses per unit $3
Variable administrative cost per unit $1
Fixed selling costs $45,000
Total fixed administrative cost $28,000
Opening inventory $21,000
Purchase of inventory $805,000
Ending inventory $35,000
Required
- Prepare a traditional income statement
- Prepare a contribution margin income statement
- Discuss why there are two approaches to the preparation of income statements.
[1 +2+2 = total 5 marks]
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