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Todrick Company is a merchandiser that reported the following information based on 1,000 units sold Sales Beginning merchandise invent Purchases Ending merchandise inventory Fixed selling
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold Sales Beginning merchandise invent Purchases Ending merchandise inventory Fixed selling expense Fixed administrative expense Variable selling expense Variable administrative expense Contribution margin Net operating income $210,000 $ 14,000 $ 140,000 $ 7,000 ory $ 8,400 $ 10,500 $ 42,000 $12,600 Required 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? Req 1 Req 2 Req 3 to 5 Req 6 Prepare a contribution format income statement. Todrick Company Contribution Format Income Statement Sales S 210,000 Variable expenses Cost of goods sold Selling expense Administrative expense $ 147,000 10,500 10,500 168,000 42,000 Contribution margin Fixed expenses Selling expense Administrative expense S 21,000 8,400 29,400 $ 12,600 Net operating income Req 1 Req 2 Req 3 to 5 Req 6 Prepare a traditional format income statement. Todrick Company Traditional Income Statement Selling and administrative expenses: Req 1 Req 2 Req 3 to 5 Req 6 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 4. Variable cost per unit 5. Contribution margin per unit Req 1 Req 2Req 3 to 5 Req 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? Traditional income statement Contribution income statement
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