Self-test problem 7.1 Anshar manufacturing makes drinking mugs. Its budgeted income statement for the coming year shows: Anshar Manufacturing Budgeted income statement $ $ 600 000 390 000 210 000 72 000 48 000 60 000 Sales (200 000 mugs) less Costs of goods sold Direct materials Direct labour Variable factory overhead Fixed factory overhead Gross profit less Operating expenses Selling Variable expenses Fixed expenses Administration and financial Variable expenses Fixed expenses Net profit 210 000 91 500 42 000 33 000 9 000 49 500 12 000 37 500 118 500 Required Recast the budgeted income statement so that all variable costs are grouped together, all fixed costs are grouped together, and the contribution margin is shown. Remember: Direct materials and direct labour are variable costs