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Prepare income statement in the contribution margin format

Shown below is an income statement in the traditional format for a firm with a sales volume of 20,000 units.

Revenues $160,000
Cost of goods sold ($16,000 + $3.20/unit) 80,000
Gross profit $80,000
Operating expenses:
Selling ($4,500 + $1.40/unit) 32,500
Administration ($7,500 + $1.00/unit) 27,500
Operating income $20,000

Please proceed to the "Analysis" worksheet and complete the basic problem requirements. Complete the problem
requirements by entering appropriate amounts or formulas in shaded worksheet cells:

a. Prepare an income statement in the contribution margin format.
b. Calculate the contribution margin per unit and the contribution margin ratio.

After completing the "Analysis" worksheet, please proceed to the "What the Numbers Mean" worksheet and respond
to the additional problem requirements.

Work in Process Finished Goods Cost of Goods Sold
Beginning Inventory (BI): 0 BI: 0
Raw Material Used: - CGM - - CGS -
Direct Labor Cost:
Manufacturing Overhead: EI:

Ending Inventory (EI): 0

Cost of goods manufactured: $-
Number of units produced: Number of units sold:

Cost per unit:

Complete the Modeling:
Gravois Inc.
Income Statement
For the Month of June

Cost of goods sold
Gross profit
Selling and administrative expenses
Operating income
Interest expense
Income before taxes
Income tax expense (35%)
Net income


Solution Summary

Your two excel spreadsheet are completed using formulas (click in cells to see computation) so you can figure out how I got each of the amounts. A discussion is provided to analyze what the numbers means.