Problem:
Shown here is an income statement in the traditional format for a firm with a sales volume of 15,000 units
Revenues......................................................................................$105,000
Cost of Goods Sold ($8000 + $3.60/unit)......................................$62,000
Gross Profit....................................................................................$43,000
Operating Expenses
Selling ($1,500 + .80/unit) .............................................................$13,500
Administration ($4000 + .50/unit)..................................................$11,500
Operating Income.........................................................................$18,000
Required
a. Prepare an income statement in the contribution format
b. Calculate the contribution margin per unit and the contribution margin ratio
c. Calculate the firm's operating income (or loss) if the volune changed from 15,000 to
1. 20,000 units
2. 10, 000 units