Problem: (Income statement in the traditional format)
Prepare a contribution margin format income statement; answer what-if questions
Shown here is an income statement in the traditional format for a firm with a sales volume of 20,000 units:
|
Revenues
|
$
|
160,000
|
|
Cost of goods sold ($16,000 + $3.20/unit)
|
|
80,000
|
|
|
|
|
|
Gross profit
|
$
|
80,000
|
|
Operating expenses:
|
|
|
|
Selling ($4,500 + $1.40/unit)
|
|
32,500
|
|
Administration ($7,500 + $1.00/unit)
|
|
27,500
|
|
|
|
|
|
Operating income
|
$
|
20,000
|
Requirement 1:
Prepare an income statement in the contribution margin format. (Omit the "$" sign in your response.)
Requirement 2:
Calculate the contribution margin per unit and the contribution margin ratio. (Round your answers to 1 decimal place. Omit the "$" and "%" signs in your response.)
Requirement 3:
(a) Calculate the firm's operating income (or loss) if the volume changed from 20,000 units to 25,000 units. (Input the amount as positive value. Omit the "$" sign in your response.)
(b) Calculate the firm's operating income (or loss) if the volume changed from 20,000 units to 11,000 units. (Input the amount as positive value. Omit the "$" sign in your response.)
Requirement 4:
Refer to your answer to requirement 1 when total revenues were $160,000.
(a) Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change, and total revenues increase by $18,000. (Input the amount as positive value. Omit the "$" sign in your response.)
(b) Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change, and total revenues decrease by $12,000. (Input the amount as positive value. Omit the "$" sign in your response.)