Mason Company has the following selected data for the current year:
Sales (10,000 units) $90,000
Direct materials $45,000
Direct labor costs $15,000
Variable manufacturing overhead $5,250
Fixed manufacturing overhead $11,250
Variable selling and administrative expenses $3,750
Fixed selling and administrative expenses $22,500
The company produced and sold 10,000 units. Direct materials and direct labor are variable costs.
Requirements:
a. Prepare an income statement for the current year using the contribution margin format.
b. Prepare an income statement for the current year using the traditional format.