Question
The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $ 996,000 $ 49.80 Variable expenses 597,600 29.88
The contribution format income statement for Huerra Company for last year is given below:
Total | Unit | |||
Sales | $ | 996,000 | $ | 49.80 |
Variable expenses | 597,600 | 29.88 | ||
Contribution margin | 398,400 | 19.92 | ||
Fixed expenses | 320,400 | 16.02 | ||
Net operating income | 78,000 | 3.90 | ||
Income taxes @ 40% | 31,200 | 1.56 | ||
Net income | $ | 46,800 | $ | 2.34 |
The company had average operating assets of $496,000 during the year.
5. As a result of a more intense effort by salespeople, sales are increased by 15%; operating assets remain unchanged.
6. At the beginning of the year, obsolete inventory carried on the books at a cost of $18,000 is scrapped and written off as a loss.
7. At the beginning of the year, the company uses $177,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock.
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