Sales revenue Total 1,080,000 Price per unit 24.00 Variable expenses 450,000 price per unit 10.00 Contribution margin 630,000 price per unit 14.00 Fixed expenses 175,000 operating income 455,000

Question 13

Carla Vista Markets 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		$1,080,000		$24.00
Variable expenses		450,000		10.00
Contribution margin		630,000		$14.00
Fixed expenses		175,000
Operating income		$455,000

(a)

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

Carla Vista Markets Income Statement
		Total		Per Unit
Sales
Variable expenses
Contribution margin
Fixed expenses
Operating income

(b)

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

Carla Vista Markets Income Statement
		Total		Per Unit
Sales
Variable expenses
Contribution margin
Fixed expenses
Operating income

(c)

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

Carla Vista Markets Income Statement
		Total		Per Unit
Sales
Variable expenses
Contribution margin
Fixed expenses
Operating income

(d)

Fixed expenses increase by $40,000.(Round per unit answers to 2 decimal places, e.g. 0.38.)

Carla Vista Markets Income Statement
		Total		Per Unit
Sales
Variable expenses
Contribution margin
Fixed expenses
Operating income

(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.)

Carla Vista Markets Income Statement
		Total		Per Unit
Sales
Variable expenses
Contribution margin
Fixed expenses
Operating income