Question
Shown here is an income statement in the traditional format for a firm with a sales volume of 20,000 units: Revenues $ 160,000 Cost of
Shown here is an income statement in the traditional format for a firm with a sales volume of 20,000 units:
Revenues | $ | 160,000 | |
Cost of goods sold ($16,000 + $3.20/unit) | 80,000 | ||
| | | |
Gross profit | $ | 80,000 | |
Operating expenses: | |||
Selling ($4,500 + $1.40/unit) | 32,500 | ||
Administration ($7,500 + $1.00/unit) | 27,500 | ||
| | | |
Operating income | $ | 20,000 | |
| | | |
|
Requirement 1: |
Prepare an income statement in the contribution margin format. (Omit the "$" sign in your response.) |
$ | ||
Variable expenses: | ||
$ | ||
| ||
Total variable expenses | ||
| ||
Contribution margin | $ | |
Fixed expenses: | ||
$ | ||
| ||
Total fixed expenses | ||
| ||
$ | ||
| ||
|
Requirement 2: |
Calculate the contribution margin per unit and the contribution margin ratio. (Round your answers to 1 decimal place. Omit the "$" and "%" signs in your response.) |
Contribution margin per unit | $ |
Contribution margin ratio | % |
Requirement 3: | |
(a) | Calculate the firm's operating income (or loss) if the volume changed from 20,000 units to 25,000 units. (Input the amount as positive value. Omit the "$" sign in your response.) |
operating income | $ |
(b) | Calculate the firm's operating income (or loss) if the volume changed from 20,000 units to 11,000 units. (Input the amount as positive value. Omit the "$" sign in your response.) |
operating loss | $ |
Requirement 4: | |
Refer to your answer to requirement 1 when total revenues were $160,000. | |
(a) | Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change, and total revenues increase by $18,000. (Input the amount as positive value. Omit the "$" sign in your response.) |
operating income | $ |
(b) | Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change, and total revenues decrease by $12,000. (Input the amount as positive value. Omit the "$" sign in your response.) |
operating income | $ |
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