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    Contribution Format Income Statement & CM Ratio

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    I need help with the following exercises. Please make sure that the exercise number and subject is included in the excel spreadsheet. Thank you very much.

    Exercise 6-1 Preparing a Contribution Format Income Statement
    Wheeler Corporation's most recent income statement follows:
    Total Per Unit
    Sales (8,000 units).................................. $208,000 $26.00
    Variable expenses.................................. 144,000 18.00
    Contribution margin............................... 64,000 8.00
    Fixed expense....................................... 56,000
    Net operating income.............................. $8,000
    Required:
    Prepare a new contribution format income statement under each of the following condition (consider each case independently):
    a) The sales volume increases by 50 units.
    b) The sales volume declines by 50 units.
    c) The Sales Volume is 7,000 units.

    6-3 Computing and Using the CM Ratio
    Last month when Harrison Creations, Inc., sold 40,000 units, total sales were $300,000, total variable expenses were $240,000, and total fixed expenses were $45,000.

    Required:
    What is the company's contribution margin (CM) ration?
    Estimate the change in the company's net operating income if it were to increase its total sales by $1,500.

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    https://brainmass.com/business/income-statement/contribution-format-income-statement-cm-ratio-301482

    Solution Preview

    Solution to your two problems is provided in a separate excel file attached. It contains the following parts.

    Statement of Income-Original level

    Statement of income-Contribution approach

    C-3 Computing and using C.M. Ratio

    (a) Contribution margin Ratio = Contribution/Sales

    (b)Statement showing the change in the company's net operating income if it ...

    Solution Summary

    This solution assists in preparing a contribution format income statement and computing and using the CM ratio.

    $2.19