Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Shown here is an income statement in the traditional format for a firm with a sales volume of 7,700 units. Cost formulas also are shown:
Shown here is an income statement in the traditional format for a firm with a sales volume of 7,700 units. Cost formulas also are shown: $34,000 23,125 $10,875 Revenues Cost of goods sold ($5,800 $2.25/unit) Gross profit 1,806 5,105 $ 3,964 Selling ($1,190+$0.08/unit) Administration ($3,950 +$0.15/unit) Operating income Required: a. Prepare an income statement in the contribution margin format. Contribution Margin Income Statement Variable expenses Total variable expenses Fixed expenses: Total fixed expenses b alculate the contribution margin per unit and the contribution margin ratio o not round intermediate caic lations Round contribution margin per unito decima places. Contribution margin per unit Contribution margin ratio c-1. Calculate the firm's operating income (or loss) if the volume changed from 7,700 units to 11,550 units. (Do not round intermediate calculations.) c-2. Calculate the firm's operating income (or loss) if the volume changed from 7,700 units to 3,850 units. (Do not round intermediate calculations.) Refer to your answer to part a for total revenues of $34,000. 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 $10,500. (Round intermediate calculations to 2 decimal places.) 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 $3,500. (Round intermediate calculations to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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