Variable Corting Income Statement and Effect on Income of Change in Operations Kimbrell Inc, manufactures three sizes of utility tables-small (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the size, and management is considering three proposals (1) continue Size M. (2) discontinue Size M and reduce total output accordingly, or (3) discontinue Size M and conduct an advertising campaign to expand the sales of Size S so that the entire plant capacity can continue to be used. of Proposal 2 is selected and Ste Mis discontinued and production curtailed, the annual fed production costs and foed operating expertes could be reduced by $142.500 and 120.350 respectively. If Proposal 3 is selected. It is anticipated that an additional annual expenditure of $85.050 for the salary of an assistant brand manager (classified as a foed operating expense) would yield an additional 130% in Size S sales volume. It is also assumed that the increased production of Size S would utilize the plant facilities released by the discontinuance of size M. The sales and costs have been relatively stable over the past few years, and they are expected to remain so for the foreseeable future. The income statement for the past year ended December 31, 2018 is as follows Sales $1.087.500 $945.000 $2022.500 $1.824.000 Cost of goods solde Variable costs Fored costs Total cost of goods sold Grens profit Operating per Variable expenses 5538.500 241.000 $779,500 5718.500 288.000 $1.006.500 5567.000 250.000 $817.000 $2.603.000 $210.500 1.000 $120.000 $110.100 $100.750 Food expenses Total operating expenses $1503 15:25 income from operations S 3 0 .00 1. Prepare an income statement for the past year in the variable costing format. Duta for each style should be reported through contribution margin. The food costs should be deducted from the total contribution margin, as reported in the "Total column, to determine income from operations. Enter all amounts as positive numbers. Karel Inc Variable Casting Income Statement For the Year Ended December 31, 2018 Sales Variable cost of goods sold Manufacturing margin Variable operating Contribution margin Focos Manufacturing costs Operating Total fed costs Income from operations 2. Based on the income statement prepared in (1) and the other data presented above, determine the amount by which total annual income from operations would be reduced belowa present level Proposal 2 is accepted. 3. Prepare an income statement in the variable costing format indicating the projected annual income from operations Proposals accepted. Data for each style should be reported through contribution margin. The fried costs should be deducted from the total contribution margin as reported in the "Total column. For purposes of this problem, the additional expenditure of $85.050 for the assistant brand manager's salary can be added to the fired operating expenses. Enter all amounts as positive numbers. bell Inc Variable Costing Income Statement For the Year Ended December 31, 2013 Variable cost of goods sold Manufacturing margin Variable ceringen Contbution 4. Sy how much would come increase above is int r o s
