Question:
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:
|
July
|
December
|
|
Production level, in units
|
5,000
|
10,000
|
|
Variable costs
|
$12,000
|
$ ?
|
|
Fixed costs
|
?
|
18,000
|
|
Mixed costs
|
10,000
|
?
|
|
Total costs
|
$40,000
|
$59,000
|
Required:
a. Prepare an income statement in the contribution margin format.
b. Calculate the contribution margin per unit and the contribution margin ratio.
c. Calculate the firm's operating income (or loss) if the volume changed from 20,000 units to
1. 25,000 units.
2. 11,000 units.