Question
Shown here is an income statement in the traditional format for a firm with a sales volume of 8,000 units. Revenues $ 32,000 Cost of
Shown here is an income statement in the traditional format for a firm with a sales volume of 8,000 units. Revenues $ 32,000 Cost of goods sold ($6,000 + $2.10/unit) 22,800 Gross profit $ 9,200 Operating expenses: Selling ($1,200 + $0.10/unit) 2,000 Administration ($4,000 + $0.20/unit) 5,600 Operating income $ 1,600 Cost formulas also are shown:
b. Calculate the contribution margin per unit and the contribution margin ratio c-1. Calculate the firm's operating income (or loss) if the volume changed from 8,000 units to 12,000 units c-2. Calculate the firm's operating income (or loss) if the volume changed from 8,000 units to 4,000 units. Refer to your answer to part a for total revenues of $32,000. d-1. Calculate the firm's operating income (or loss) if unit selling price and variable expenses per unit do not change and total revenues increase by $12,000. d-2. Calculate the firm's operating income (or loss) if unit selling price and variable expenses per unit do not change and total revenues decrease by $7,000.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started