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Todrick Company is a merchandiser that reported the following information based on 1,000 units sold 420,000 $28, 000 $280,000 14,000 Sales Beginning merchandise inventory Purchases
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold 420,000 $28, 000 $280,000 14,000 Sales Beginning merchandise inventory Purchases Ending merchandise inventory Fixed selling expense Fixed administrative expense Variable selling expense Variable administrative expense Contribution margin Net operating income $ 16,800 21,000 $84,000 25,200 Requirec 1. Prepare a contribution format income statement. 2. Prepare a traditional format income statement. 3. Calculate the selling price per unit. 4. Calculate the variable cost per unit. 5. Calculate the contribution margin per unit. 6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales? Prepare a contribution format income statement Todrick Company Contribution Format Income Statement $420,000 Sales Variable expenses: Cost of goods sold 21,000 Selling expense Administrative expense 21,000 Contribution margin 84,000 Fixed expenses: Selling expense Administrative expense 16,800 16,800 Net operating income Todrick Company Traditional Income Statement $420,000 Sales 294,000 Cost of goods sold Gross margin 126,000 Selling and administrative expenses $ 16,800 Administrative expense Variable manufacturing overhead 21,000 Selling expense 37,800 Net operating income 3. Calculate the selling price per unit. 4. Calculate the variable cost per unit. 5. Calculate the contribution margin per unit. 3. Selling price per unit $ 420 4. Variable cost p le cost per unit 5. Contribution margin per unit
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