The following information is available for each unit of finished product produced and sold (yes, this is the same information that was used in Question 3):

Sales price	$60		Variable manufacturing cost	$20
Fixed manufacturing cost*	12		Variable marketing and administrative cost	6
Fixed marketing and administrative cost *	4
*The unit fixed manufacturing cost and fixed marketing and administrative costs are based on an estimated volume of 6,000 units produced and sold.

a) Prepare a traditional income statement in the space below.

b) Prepare a contribution margin income statement in the space below. 

 Question 5

The Power Tool Division of ABC Hardware sells one product, Jig Saw, and has the following data for the second quarter:

Units of output 1,200 units

Price per unit $ 150

Variable cost per unit $ 90

Total fixed costs $48,000

Calculate each of the following. Show your work in the space below your answer.

a) Quarterly operating profit when 1,200 units are sold. __________

b) Break-even volume in units. __________

c) Contribution margin ratio. __________

d) Break-even volume in sales dollars. __________

e) Sales dollars and units needed to generate an operating profit of $57,000. $__________ and __________ units

f) Number of units sold that would produce an operating profit of 15% of sales dollars. __________

Question 6

The Power Tool Division of ABC Hardware sells one product, Jig Saw, and has the following data for the second quarter:

Units of output 1,200 units

Price per unit $ 150

Variable cost per unit $ 90

Total fixed costs $48,000

Assume that the Power Tool Division introduces a second product, Circular Saw, with a unit price of $200 and a unit variable cost of $120. The total fixed cost is increased to $68,000. The manager of ABC Hardware estimates that Jig Saws and Circular Saws will sell in a 60% and 40% ratio, respectively.

Calculate the break-even volume in units using the weighted-average contribution margin method. Show your work in the space below.

# of units of Jig Saw to break-even: __________

# of units of Circular Saw to break-even: __________