P12.20 contribution margin income statement unit changes
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Contribution margin format income statement "what-if" questions
P12.20
Prepare a traditional income statement and a contribution margin format income statement (and contribution margin ratio) for a firm with a sales volume of 15,000 units:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . $105,000
Cost of goods sold ($8,000 1 $3.60/unit) . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 62,000
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . $ 43,000
Operating expenses:
Selling ($1,500 1 $0.80/unit) . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 13,500
Administration ($4,000 1 $0.50/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,500
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . $ 18,000
Calculate the firm's operating income (or loss) if the volume changed from 15,000 units to
1. 20,000 units.
2. 10,000 units.
Refer to the original data when total revenues were $105,000. Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change and total revenues
1. Increase by $15,000.
2. Decrease by $10,000.
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