Question:
Mary Smith sells gourmet chocolate chip cookies. The results of her last month of operations are as follows:
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Sales revenue
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|
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Cost of goods sold (all variable)
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25,575
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Gross margin
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|
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Selling expenses (20% variable)
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8,000
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Administrative expenses (60% variable)
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12,000
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Operating income
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$ 4,425
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Required
1. Prepare a contribution format income statement for Mary.
2. If Mary sells her cookies for $1.60 each, how many cookies did she sell during the month?
3. What is the contribution margin per cookie?
4. What is Mary"s contribution margin ratio?