Share
Explore BrainMass

Drafting a Contribution Format Income Statement

Using a contribution format income statement
Porter company's most recent income statement is shown below:

total per unit

Sales(30,000 units) $150,000 $5
Less variable expenses $90,000 3

Contribution margin $60,000 $2
Lesss fixed expenses $50,000

Net operating income $10,000

prepare a new income statement under each of the following conditions (consider each case independently:

1. The sales volume increases by 15%
2. The selling price decreases by 50 cents per unit, and the sales volume increases by 20%
3. The selling price increases by 50 cents per unit, fixed expenses increase by $10,000, and the sales volume decreases by 5%
4. variable expenses increase by 20 cents per unit, the selling price increases by 12%, and the sales volume decreases by 10%.

Solution Preview

Using a contribution format income statement
Porter company's most recent income statement is shown below:

total per unit

Sales(30,000 units) ...

Solution Summary

This explains the preparation of contribution format income statement.

$2.19