Question
Shown here is an income statement in the traditional format for a firm with a sales volume of 15,000 units: Revenues $ 105,000 Cost of
| Shown here is an income statement in the traditional format for a firm with a sales volume of 15,000 units: |
| Revenues | $ | 105,000 | |
| Cost of goods sold ($8,000 + $3.60/unit) | 62,000 | ||
| Gross profit | $ | 43,000 | |
| Operating expenses: | |||
| Selling ($1,500 + $0.80/unit) | 13,500 | ||
| Administration ($4,000 + $0.50/unit) | 11,500 | ||
| Operating income | $ | 18,000 | |
| Required: |
| a. | Prepare an income statement in the contribution margin format. |
| b. | Calculate the contribution margin per unit and the contribution margin ratio. (Do not round your intermediate calculations. Round contribution margin per unit to 2 decimal places.) |
| c.1 | Calculate the firm's operating income (or loss) if the volume changed from 15,000 units to 20,000 units. (Do not round intermediate calculations.) |
| c.2 | Calculate the firm's operating income (or loss) if the volume changed from 15,000 units to 10,000 units. (Do not round intermediate calculations.) |
| Refer to your answer to part a when total revenues were $105,000. |
| d.1 | Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change and total revenues increase by $15,000. (Do not round intermediate calculations.) |
| d.2 | Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change and total revenues decrease by $10,000. (Do not round intermediate calculations.) |
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