The following data are from the accounting records of Niles Castings for year 2:

Units produced and sold		80,000
Total revenues and costs
Sales revenue	$	270,000
Direct materials costs		63,000
Direct labor costs		33,000
Variable manufacturing overhead		18,000
Fixed manufacturing overhead		41,000
Variable marketing and administrative costs		11,500
Fixed marketing and administrative costs		38,000

Required:

a. Prepare a gross margin income statement.

Gross Margin Income Statement
Sales revenue	$270,000
Variable manufacturing costs
Fixed manufacturing overhead costs	41,000
Gross margin
Fixed marketing and administrative costs	38,000
Variable marketing and administrative costs	(11,500)
Operating profit

b. Prepare a contribution margin income statement.

Contribution Margin Income Statement
Sales revenue	$270,000
Variable manufacturing costs
Variable marketing and administrative costs	(11,500)
Contribution margin
Fixed marketing and administrative costs	(38,000)
Fixed manufacturing costs	(41,000)
Operating profit